Ocean cargo/global logistics: Panama Canal transit to become less expensive in June

Patrick Burnson
Executive Editor
Logistics Management, 5/1/2009

PANAMA CITY—Despite earlier signals of an economic rebound, the Panama Canal Authority is giving carriers a break on rates through the summer.

Panama Canal Authority (ACP) has announced a temporary plan that will provide short-term cost reduction and greater flexibility to its Reservation System. The temporary measures, designed to help mitigate the impact of the economic crisis on the Canal's clients, were approved by the ACP Board of Directors earlier in the week, said spokesmen.

The result of informal consultations with clients, the temporary measures will take effect June 1, 2009 and continue through September 30, 2009.

The two primary components comprise a redefinition of ballast (ships without cargo) for full container vessels transiting the Canal along with modifications to the reservation system to increase flexibility and reduce fees.

In an interview with LM earlier this year, Alberto Alemán Zubieta, administrator and CEO of ACP said shippers could expect a more robust recovery.

“Our economic advisors are studying trends pointing to a rebound in shipping,” he said. “Our findings suggest a recovery at the end of 2009 or early 2010.”

And while the latest news does not directly contradict that observation, it indicates that business is still lagging behind a bullish forecast.

Carriers will now have 30 days before the date of a vessel's transit to request slot substitutions without additional costs. Previously, carriers could make such requests without an additional charge if that request was made at least 60 days prior to the date of transit. This temporary measure grants shipping lines more flexibility for slot substitutions, allowing them to replace one vessel for another with similar dimensions.

The ACP will also modify the definition of ballast for full container vessels, allowing a ship that carries 30 percent or less of its capacity to be charged the ballast rate of $57.60 per twenty-equivalent unit (TEU) $14.40 less than the $72 laden (ships with cargo) rate.

Meanwhile, the base reservation price is being reduced depending on the vessel size for all segments that use the ACP’s Reservation System. For example, the base reservation price for a super vessel, with a beam greater than or equal to 100 feet and a length greater than or equal to 900 feet, is reduced by $5,000 per transit.

Currently, when vessels fail to arrive on-schedule, they lose their slot, but have the option to pay an additional charge to keep the reservation and transit that same day. The new temporary measure reduces the charges and provides shipping lines with greater flexibility. The percentage reduction varies depending on the vessel's arrival time.

Carriers will now have 30 days before the date of a vessel’s transit to request slot substitutions without additional costs. Previously, customers could make such requests without an additional charge if that request was made at least 60 days prior to the date of transit.

“This temporary measure grants shipping lines more flexibility for slot substitutions, allowing them to replace one vessel for another with similar dimensions,” said spokesmen.

Panama Canal to Cut Some Tolls in June

Photo courtesy Panama Canal Authority

Peter T. Leach



May 1, 2009 1:09PM GMT



The Journal of Commerce Online - News Story

Increases take effect May 1 but concessions to mitigate economic crisis

In a concession to financially pressed shipping lines, the Panama Canal Authority will cut back some tolls and fees while giving carriers greater flexibility in reserving movements through the canal.

But the canal authority also left in place new toll increases going into effect May 1, rejecting calls to put off the increases.

The new fee structure starting June 1 will temporarily reduce tolls on largely empty containerships and charges for transit reservations. The canal authority said the temporary measures are “designed to help mitigate the impact of the crisis on the Canal’s clients.”

Because of the global economic recession and the resulting slump in trade, the major global shipping lines and shipping organizations have been urging the canal authority to delay the toll increases that went into effect May 1.

But a reduction in tolls on ships in ballast and in reservation fees from June 1 to Sept. 30 of this year are the only concessions the authority was willing to make.

Major container lines have expected some kind of reduction in canal costs. Rodolphe Saade, chief executive vice president of CMA CGM, told The Journal of Commerce last month that the line was in discussions with both the Panama Canal and the Suez Canal authorities about lowering tolls or postponing scheduled toll increases.

“They do understand the situation. It seems that the Panama Canal is ready to make a move, while we have not heard yet from the Suez Authority,” Saade said.

Other container lines have been investigating ways to avoid the tolls altogether. Maersk Line, for example, told The Journal of Commerce that its analysis showed that it could reroute vessels from Asia to the U.S. East Coast around Cape Horn at the southern tip of South America and still save money on the trip by avoiding the Panama Canal tolls, despite the longer route.

The Panama Canal Authority said it will modify the definition of ballast for full container vessels, allowing a ship that carries 30 percent or less of its capacity to be charged the ballast rate of $57.60 per TEU, $14.40 less than the $72 laden (ships with cargo) rate.

It will also reduce the base reservation price depending on the vessel size for all segments that use the reservation system.

For example, it said the base reservation price for a super vessel, with a beam greater than or equal to 100 feet and a length greater than or equal to 900 feet, is reduced by $5,000 per transit.

It is also reducing the fee for late arrivals. Currently, when vessels fail to arrive on schedule, they lose their slot, but have the option to pay an additional charge to keep the reservation and transit that same day. The new temporary measure reduces the charges and provides shipping lines with greater flexibility. The percentage reduction varies depending on the vessel’s arrival time.

The authority said the temporary measures also allow more flexibility for slot substitutions. The canal authority will now allow shipping lines 30 days before the date of a vessel’s transit to request slot substitutions without additional costs.

Previously, shipping lines could make such requests without an additional charge if that request was made at least 60 days prior to the date of transit. The canal authority said this temporary measure grants shipping lines more flexibility for slot substitutions, allowing them to replace one vessel for another with similar dimensions.

Contact Peter T. Leach at pleach@joc.com .

Epidemic and Pandemic Alert and Response (EPR)

http://www.who.int/csr/disease/swineflu/guidance/public_health/travel_advice/en/index.html

No Rationale for Travel Restrictions

1 May 2009 -- WHO is not recommending travel restrictions related to the outbreak of the Influenza A (H1N1) virus. Today, international travel moves rapidly, with large numbers of individuals visiting various parts the world. Limiting travel and imposing travel restrictions would have very little effect on stopping the virus from spreading, but would be highly disruptive to the global community.

Influenza A (H1N1) has already been confirmed in many parts of the world. The focus now is on minimizing the impact of the virus through the rapid identification of cases and providing patients with appropriate medical care, rather than on stopping its spread internationally. Furthermore, although identifying the signs and symptoms of influenza in travellers can be an effective monitoring technique, it is not effective in reducing the spread of influenza as the virus can be transmitted from person to person before the onset of symptoms. Scientific research based on mathematical modelling indicates that restricting travel will be of limited or no benefit in stopping the spread of disease. Historical records of previous influenza pandemics, as well as experience with SARS, have validated this point.

Travellers can protect themselves and others by following simple recommendations related to travel aimed at preventing the spread of infection. Individuals who are ill should delay travel plans and returning travellers who fall ill should seek appropriate medical care. These recommendations are prudent measures which can limit the spread of many communicable diseases and not only Influenza A (H1N1).

Influenza A(H1N1) - update 7

1 May 2009 -- The situation continues to evolve rapidly. As of 06:00 GMT, 1 May 2009, 11 countries have officially reported 331 cases of influenza A(H1N1) infection.

The United States Government has reported 109 laboratory confirmed human cases, including one death. Mexico has reported 156 confirmed human cases of infection, including nine deaths.

The following countries have reported laboratory confirmed cases with no deaths - Austria (1), Canada (34), Germany (3), Israel (2), Netherlands (1), New Zealand (3), Spain (13), Switzerland (1) and the United Kingdom (8).

Further information on the situation will be available on the WHO website on a regular basis.

WHO advises no restriction of regular travel or closure of borders. It is considered prudent for people who are ill to delay international travel and for people developing symptoms following international travel to seek medical attention, in line with guidance from national authorities.

There is also no risk of infection from this virus from consumption of well-cooked pork and pork products. Individuals are advised to wash hands thoroughly with soap and water on a regular basis and should seek medical attention if they develop any symptoms of influenza-like illness.