Paying the toll

Higher fees loom for those transiting the Panama Canal.

6% of world trade passes through the Panama Canal. The thousands of vessels transiting its waterway every year have had to pay a toll since its inception. A new increase in toll fees reflects soaring profits in the maritime industry and the administration is set to reap greater revenue – and fiscal breathing space – as a result. Since April of last year, the canal’s operator has been carrying out a restructuring plan that simplifies its booking system and implies an increase in the rate of these and other maritime services, due to growing demand. This year thus far, the Canal has recorded a 14.4% growth in revenue compared to 2021.  

A Panama-based specialist in the maritime industry explained, “Profits in the maritime industry have exceeded expectations and have increased exponentially. Given this bonanza, the increases in rates will not have a significant impact, given that the shipping companies pass this increase on to freight rates, that is, to the consumer. So that the price of the toll will be in accordance with the market.”  

“…the increases in rates will not have a significant impact, given that the shipping companies pass this increase on to freight rates, that is, to the consumer.”  

A specialist in the maritime industry, Panama

From January to August 2020, the Canal’s toll revenues suffered a drop of -0.4% due to the collateral effects caused by the pandemic. In 2019, they grew by 4.5%, and in 2018 they increased by 9.8%. In the period through August 2021, there was also a significant increase in net tonnage (13.1%) and cargo volume (15.6%) reflecting an increase in trade flows across the pacific.  

The purpose of the restructuring, as explained by the Canal Administration in a press release, is “to respond to the continuous changes in the market and manage capacity in the face of growing demand.”  

A former president of the Panama Chamber of Shipping explained, “The change in the Canal’s tariffs allows it to generate income of more than USD 400 million a year. It introduces an element of variability to capitalise on the moments in which the demand for more transits through the waterway increases. They are changes that adjust to the moment that the maritime industry is experiencing, as well as to the changes that will impact it in the immediate future.”

“The change in the Canal’s tariffs allows it to generate income of more than USD 400 million a year… to capitalise on the moments in which the demand for more transits through the waterway increases.”

A former president of the Panama Chamber of Shipping, Panama

The shipping companies have rate models that are adjusted according to market circumstances, which has allowed them to generate record profits during the pandemic, and the channel is seeking with its new rates a model similar to the shipping companies that allows it to take advantage of the seasons when demand rises. 

“Changes in traditional trade routes due to changes in globalisation, and growing regionalisation, protectionism, mitigation of climate change, change in fuels etc could all affect the future profitability of the Canal,” added the maritime specialist. Therefore, the government should invest in lowering the Canal’s carbon footprint, investing more in digitalisation to meet the demand for the type of ships that are going to transit and adapting to so-called ‘autonomous ships’. To stay competitive, the Canal cannot just rely on market-adaptive tariffs, in must also adjust to geopolitical and climate realities.  

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