PANAMA CITY, Panama, April 26, 2007 – Following a recommendation from the Board of Directors of the Panama Canal Authority (ACP), the Cabinet Council of the Republic of Panama yesterday approved the proposal to restructure the Panama Canal’s pricing system and certain regulations. On February 2, 2007, the ACP announced its desire to move toward a charge that moves closer to the commercial value of the service and route. After a more than 30-day public consultation period, in which a total of 21 written submissions were received, the ACP conducted a hearing on March 14 where a total of 14 representatives from shipping and government expressed their views. On April 5, in response to industry requests, the proposal was slightly modified: implementation of the new charges, for certain segments, was postponed from May 2007 to July 1, 2007. These segments include: general cargo, dry bulk, tankers and vehicle carriers. Due to this modification, the issue was reopened for public comment for a 15-day period. A total of 10 written submissions, in both English and Spanish, were received by the ACP from various individuals and groups. (more)
Editor’s Comment: The United States managed the Panama Canal essentially as a not-for-profit enterprise from 1914 to 1999. Toll rates were kept as low as possible to further international trade, and the canal administrators collected just enough money from passing ships to make the canal self-sufficient. It paid for its own maintenance. Starting on 1 January 2000 the Republic of Panama assumed full responsibility for the operation and maintenance of the Panama Canal, including setting the toll rates. In the past seven years they have made several changes to the toll structure, to include managing the Panama Canal as a money making enterprise. Funds collected first pay for the daily operation expenses and maintenance, and the remainder is delivered to Panama’s national treasury and added to the general fund. Now that Panama has decided to expand the Panama Canal and build the third set of locks, this toll increase will generate more revenue to pay for the expansion. And rather than trying to keep tolls as low as possible, canal managers now study where the upper limits are - how much can we charge and still create an economic advantage for shippers to use the canal as opposed to other routes? The fact of the matter is that the Panama Canal is a monopoly, the only way to get goods quickly and efficiently between the Pacific and Atlantic oceans. You can strap those LCD TVs to the backs of chipmunks but that’s more expensive.
(ACP Press Release Continues)
Refrigerated cargo and passenger vessels will maintain the implementation date of October 1, 2007. Additionally, container ships will maintain the implementation date of May 1, 2008. The toll of $54 per TEU for container ships and other vessels with on-deck container carrying capacity, approved in 2005, remains on schedule to become effective May 1, 2007.
“With the new pricing system, the Canal is charging its customers a price closer to the value of services provided. We reached this decision through an open and transparent process, providing the industry with multiple opportunities to comment. The new system, approved yesterday by the Cabinet Council, reflects this open dialogue, incorporating several of the requests we received from the industry over the past few months,” said ACP Administrator/CEO Alberto Alemán Zubieta.
As the world becomes more interconnected – barriers dropping, tariffs reduced – the value of the Panama Canal and its role in the global supply chain continues to grow. Shippers moving goods from the U.S. Gulf Coast to Asia can save up to 10 voyage days via the Panama Canal, and vessels traveling from the West Coast of South America to the U.S. East Coast shave an estimated eight to 16 voyage days compared to alternative routes. Given the cost increases in shipbuilding, fuel and vessel operations, the route through the Panama Canal has significantly increased its value to its users.
Details on the new pricing system can be accessed, in English and Spanish, at www.pancanal.com. Significant elements include:
Maximum Displacement Draft vs. Arrival Draft: Vessels will be charged based on their displacement to simplify and streamline the process. This charge will now be based on the maximum displacement draft instead of the arrival displacement to assess tolls according to the specified tonnage rate.
Administrative Changes: Some administrative changes have been made, but these changes will have no economic impact whatsoever. These revisions provide necessary linguistic and grammatical clarifications to the document or reinsert missing words to processes and procedures.
Passenger Vessels: Regarding passenger vessels, an assessment of tolls will be based on maximum passenger capacity. In general, under this change, large vessels will be charged tolls on a per berth basis, and smaller ships will continue under the Canal tonnage tolls system. These changes are largely due to suggestions from industry representatives – another example of the ACP listening to the industry.
Tolls: The adjustment and implementation dates of the new toll rates will depend on the vessel type/segment, e.g. container vessels, passenger vessels, general cargo, refrigerated cargo, dry bulk, tankers and vehicle carriers. On average, there will be a 10 percent increase per year over the next three years. Yesterday’s announcement marks the first toll increase in the last four years. In 2005, the ACP adjusted tolls for container ships and other vessels with on-deck container carrying capacity.
About the Panama Canal Authority (ACP)
The ACP is the autonomous agency of the Government of Panama in charge of managing, operating and maintaining the Panama Canal. The operation of the ACP is based on its organic law and the regulations approved by its Board of Directors. For more information, please refer to the Panama Canal Authority’s Web site: www.pancanal.com.
The Authority’s responsibility to the Panamanian people is paramount. The Canal belongs to the people and benefits from the Canal should accrue to as many Panamanians as possible. The Authority will plan its future so that it will continually contribute to the economic development and welfare of the citizens of Panama.
SOURCE: Don Winner @ Panama-guide.com
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Source: VIP Panama