Gold Key Service

Hearing on new Panama Canal toll system

Updated 3:45 p.m. ET, Fri Jan 7, 2005

By Peter T. Leach
The JOURNAL of COMMERCE ONLINE

The Panama Canal Authority held a public hearing today on its proposal to overhaul the system it uses to measure and assess tolls on full container vessels (schedules) and other vessel types with on-deck container carrying capacity.

The authority said that, if adopted, the new system would result in container ships being assessed a toll of $42 for every TEU of its capacity as of May 1 2005, increasing to $49 on Jan. 1 2006, and $54 on Jan. 1, 2007.

In previous consultations with the liner industry, the authority had discussed raising the per-TEU toll to an eventual $40 in increments over three or four years, starting on Jan. 1, 2005.

Carriers had asked that the increases begin on May 1 to coincide with the start of the annual trans-Pacific shipping contracts. When the new system of per-TEU tolls was announced in December, the industry had been surprised that the toll would go to $42 in May, and that it would be increased two more times after that.

If the proposed new system of assessing tolls is put into effect on May 1, it would result in an immediate increase of 31.25 percent in tolls on full container ships.

By the end of the two-year phase-in period, the new system would bring about a toll increase of around 65 percent, according to Rodolfo Sabonge, director of corporate planning and marketing for the authority. He said the current toll per TEU of capacity on container ships is "$32 on average."

The authority said the reason for changing the measurement and pricing system, including the move to use TEUs instead of the Panama Canal Universal Measurement System (PC/UMS) tonnage for full container vessels, is to put the current system on a par with international standards and to enable the agency to receive fair value for its services.

Currently, the authority calculates tolls based on PC/UMS net tonnage and, in general, includes: all enclosed spaces in the vessel, such as the hull; spaces reserved for generating capacity to run refrigerated containers; other spaces that include special stability equipment, which keeps the vessel level during high-speed container operations; storerooms and other areas that improve the earning capacity of the vessel, and spaces that are used to directly support the cargo carrying capacity of the ship.

The change in the charge unit, from PC/UMS net tonnage to the total TEU carrying capacity of the vessel, required the authority to adjust the TEU charge to reflect the enclosed spaces that support the earning capacity of the vessel, which were part of the PC/UMS formula.

The authority said this resulted in an increase from the initial $40 per TEU that the ACP had previously proposed to charge for on-deck container capacity, to the $54 per TEU that is in the formal proposal for container carrying capacity of the entire vessel.

The authority said that 15 representatives from the shipping industry, government delegations from countries that use the Canal, and Panamanian stakeholders participated in the hearing, held in in Panama City, Panama.

Among the participants were the World Shipping Council and the International Chamber of Shipping, and the governments of Ecuador, Peru, Chile and South Korea.

Today's hearing marks the close of the official consultation period that began on Dec. 7, 2004.

The authority said its board of directors will review the 31 submissions and other comments it received during the official consultation period and will turn in its recommendation to the Cabinet Council of the Republic of Panama for approval in the next few weeks.

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