Container Surcharges Of Up To 37% At Panama Canal

Furniture World Magazine

Container shipping lines in the Transpacific Stabilization Agreement (TSA) have recommended an increase to their individual Panama Canal surcharges, from US$115 to $165 per container, effective May 1, 2005. The move corresponds with a sharp increase in transit fees assessed by the Panama Canal Authority (ACP) on May 1, to help pay for future Canal expansion. The ACP announced in February 2005 that it will change the way it calculates container vessel transit fees, effective May 1, 2005, from a method based on vessel weight plus a percentage of containers on deck to one based on a vessel’s full container capacity. The Canal Authority is additionally increasing basic per container charges, along with booking fees carriers must pay to reserve a guaranteed time slot for transit. The result will be a significant overall increase in Panama Canal tolls beginning May 1. The ACP plans two further increases in per container charges, in May 2006 and May 2007, which TSA lines say they will seek to recover as those effective dates approach. Cost impacts are compounded on westbound return sailings, where charges are assessed as if each ship is full, based on its rated container capacity. In actuality, around half of the containers aboard those sailings are empty units being repositioned for the Asia-U.S. trade and provide no freight revenue offset. TSA lines indicated that part of the scheduled fee increase is intended to cover Canal-related costs associated with repositioning empty containers back to Asia. “Not only are the ACP increases much higher than carriers were led to expect initially, but the impact is that much greater for the roundtrip voyage because of growing transpacific imbalances,” explained Albert A. Pierce, TSA Executive Director. “As a result, container lines face Canal fee increases of as much as 37% per ship depending on size and type. It is indicative of spiraling costs carriers are seeing across their networks that are outside their control.” Higher Canal fees reflect the broader overall trend of sustained, double-digit transpacific cargo growth and a sense of urgency among ports, railroads and other supply chain partners to fund expanded facilities and productivity improvements. “Container lines are bringing new, larger ships into transpacific service to meet cargo demand, but ship capacity is only one part of the puzzle,” Pierce emphasized. “Carriers can no longer afford to view the ship independently from end-to-end system capacity, in dealing with tight supply chain schedules.” Extended terminal hours, on-dock rail expansion and reconfiguration to build longer intermodal trains, development of off-dock container yards and chassis storage, more efficient staging of containers and other strategies, all entail significant new costs that ultimately must be paid for through the expanding cargo base. These costs are currently being passed through to ocean carriers in the form of higher terminal and rail rates, special charges, and operational constraints such as cargo allocation limits which constrain throughput. In the meantime, growth trends show every indication of continuing in 2005: Total transpacific shipments in January were up 10.7% over January 2004, to 460,000 FEU. TSA is a voluntary discussion and research forum of 13 major container shipping lines serving the trade from Asia to ports and inland points in the U.S. More information on TSA, including current and scheduled guideline rates and charges as well as a list of members can be found at www.tsacarriers.org.