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.