Monday, 13 July 2020

Panama Canal imposes “freshwater” charge

Shipping industry faces US$370 dollar million hit from new Panama Canal charge

(Reuters) – A new “freshwater” charge introduced this month to help the Panama Canal cope with climate change will cost the shipping industry up to US$370 million a year, marking another blow for maritime companies already hit by fallout from the coronavirus outbreak.

Photo REUTERS/Carlos Jasso/

The Panama Canal, one of world’s busiest shipping routes which handled nearly 14,000 transits last year, said last month it would introduce a charge from Feb. 15 of $10,000 for any vessel more than 125 feet long.

The canal, which relies on water from nearby Gatun Lake, has been hit by drought which affects water levels in the chokepoint. The Panama Canal authority said it would bring in a variable surcharge based on the level of Gatun Lake to ensure the canal has enough water.

- paying the bills -

The authority said the charges were a consequence of a lack of rainfall and this was a short-term measure needed to tackle the impact of climate change.

The International Chamber of Shipping (ICS), which represents more than 80% of the global merchant fleet, said on Thursday it was surprised by the charge after working with the canal authority on a separate increase in tolls which is due to come into effect in April.

“The industry is currently facing increased price pressures globally, as demand has been hit hard by the coronavirus and markets are adjusting to the new regulations on sulphur levels,” ICS secretary general Guy Platten said, referring to new rules requiring ships to use cleaner fuel.

The coronavirus outbreak has upended supply chains and already disrupted shipping across the world leading to commercial losses for certain types of shipping, including container lines.

The industry is also having to pay billions of dollars in extra fuel costs due to the tough new sulphur emissions rules that started in January.

- paying the bills -

Platten said the global shipping sector was already operating “on the slimmest of margins”.

“ICS calculates that at current water levels the ‘freshwater charge’ alone could cost global shipping $230 million. In a worst case scenario this could be as high as $370 million per year,” he said.

“Cost hikes in this range, without sufficient warning, places undue pressure on the industry at a sensitive time when we are being asked to invest in a low emissions future,” Platten said. He urged the canal authority “to rethink the hasty introduction”.

The Panama Canal Authority said the measures were in line with water surcharges introduced at ports around the world. In a statement, it said the measure had been explained to customers.

“The Panama Canal remains committed to adapt to and mitigate rising environmental challenges, and is confident the new water measures are the best and necessary solution for safeguarding an operational level of water, particularly as Panama heads into its dry season,” the statement said.

“By implementing these measures, the Panama Canal simply aims to ensure that the value of its limited resources is appropriately factored into global supply chains and adapted accordingly,” it said.

- paying the bills --

A study last month estimated at least US$1 trillion of investment in new fuel technology is needed to enable the shipping industry to meet U.N. targets for cuts in carbon emissions by 2050.

Related Articles

New Panama Canal Bridge Ready To Begin

Work on the Fourth Bridge over the Panama Canal is set...

The Panama Canal is running out of water

For over 100 years, the Panama Canal has been a staple...

MOST READ

Is entry into the European Union based on physical location or nationality?

(QCOSTARICA) On July 1 the European Union (EU) Member States approved a list of 15 countries, considered as 'safe' due to their epidemiological situation...

Costa Rica adds 26th death associated with covid-19

(QCOSTARICA) An 89-year-old woman, a resident in the province of San José, died this morning, Friday, July 10, with COVID-19. With this death, Costa...

Number of COVID-19 patients doubled in two weeks of disobedience

(QCOSTARICA) on Father's Day, Sunday, June 21, and with 15 weeks into the pandemic, the Ministry of Health, reported 2,213 confirmed cases of COVID-19...

Time to change the message!

(QCOSTARICA) "The pandemic is not killing us but the quality of information they give us," say experts urging the Government of Carlos Alvarado to...

28th victim of COVID-19 in Costa Rica reported

(QCOSTARICA) A 41-year-old woman, a foreigner in Costa Rica, died this morning victim of COVID-19, confirmed the Ministry of Health. She is casualty number...

COVID-19 in Costa Rica: 350 new cases

(QCOSTARICA) Case records don't last long. This Wednesday another 350 confirmed infections were reported in the last 24 hours. According to the information provided by...

Let's Keep This Going!

To be updated with all the latest news and information about Costa Rica and Latin America.