Panama Canal proposes new tolls, carrier loyalty program

Panama Canal proposes new tolls, carrier loyalty program

The Panama Canal Authority released proposals for a new toll structure that it has been reviewing with various industry segments for the last year.

The proposed structure will increase tolls on container ships, which were excluded from the last two rounds of toll increases in 2012 and 2014. The canal authority is also proposing a customer loyalty program for container lines, similar to airline frequent flyer programs. Frequent container customers will receive premium prices, once they reach a particular volume of 20-foot-equivalent units on ships transiting the canal.

The proposed new toll structure will go into effect in April 2016 after the third set of locks that are under construction opens to commercial traffic. The new tolls will apply to the existing canal as well as the new lane of traffic.

The proposed tolls include significant reductions in the capacity-based charge and price differentiation based on vessel size ranges. The canal authority said that under the new structure it will share with its customers the risks associated with fluctuating economic conditions and lower-utilization return voyages.

In developing the new tolls, the canal authority has had to carefully weigh their impact on shipping lines that can use competing routes for cargo shipped from Asia to North America, such as the Suez Canal, the intermodal mini-landbridge from the U.S. West Coast to inland destinations.

“The proposal, in its current form, safeguards the competitiveness of the waterway, charges a fair price for the value of the route and facilitates the Canal´s goal of providing impeccable service to the global shipping and maritime community,” Panama Canal Administrator/CEO Jorge Luis Quijano said in a statement. He said the canal authority had thoroughly analyzed various alternatives and held conversations with the maritime industry for over a year.

Many container shipping line CEOs have said they would have to assess the new tolls structure before they decide whether to return to using the Panama Canal route from the Suez route, which they have been using in order to realize the economies of scale offered by the large post-Panamax ships that can use that route.

The proposal modifies pricing on all vessel segments, with tolls on each vessel segment to be priced based upon different units of measurement.

For example, tolls on container ships will be measured and priced on the number of TEUs; tolls on dry bulk ships will be based on deadweight tonnage capacity and metric tons of cargo; and tolls on passenger vessels will be based on berths.

The proposal includes tolls for LNG vessels, a new trade for the Panama Canal. Currently, LNG vessels cannot pass through the canal because they are too wide fit the existing locks. The proposed unit of measurement for LNG vessels is the cubic meter, which is widely used in LNG shipping and will ease the calculations of tolls for new customers to the Panama Canal.

The new toll structure will also provide an incentive for the new LNG segment, where customers that use the same vessel for a roundtrip voyage through the canal will have the option of receiving a special ballast fee, if the transit in ballast is made within sixty days after the laden transit was completed.

LNG tolls will be based on cubic meters and tankers will be measured and priced on Panama Canal tons and metric tons. The canal authority is inviting the public to submit written comments on its proposals by Feb. 9 for review in a public hearing on Feb. 27.

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