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Photo courtesy Panama Canal Authority

More Surcharges Loom as Panama Canal Restrictions Tighten

The Loadstar
Total Views: 6635
November 21, 2023

By Gavin van Marle (The Loadstar) –

French carrier CMA CGM is set to become the first major carrier to apply a new surcharge on shipments transiting the Panama Canal, in response to the ongoing capacity reductions.

The world’s third-largest shipping line said the series of reduced capacity measures introduced by the waterway authority this year – and forecast to continue into 2024 – were pushing up its costs.

“The lack of precipitation over the summer has forced the Panama Canal Authority to reduce the number of vessels transiting a day. As a consequence, by 1 January, booking windows for transiting the canal’s neopanamax locks will be reduced by 30%.

“These restrictions, combined with an increase in the canal tariff implemented earlier in the year, are taking a severe toll on CMA CGM’s operations,” it said.

Loadstar Premium analysis last week suggested that, by the next scheduled transit reduction – down to 18 a day from February – could mean daily capacity through the neopanamx locks could be less than 50% of its design capacity.

Earlier this month, Maersk warned shippers to prepare for transit issues at the waterway, but said advanced planning was currently enough to mitigate potential delays.

It told customers: “We are closely collaborating with the PCA to secure the necessary transit slots. By scheduling transits between 30 and 14 days before arrival, depending on vessel size and direction, we aim to safeguard our transit schedule.”

It added that it also had “limited” access to Panama Canal Railway services, which runs blocktrains between Balboa and Cristobal, “enabling an alternative container transport option between the Atlantic and Pacific gateways”.

However, matters have been further complicated by public protests erupting across the country over Canadian mining company First Quantum’s plans to expand the Cobra Panama copper mine into virgin rainforest.

The protests have drawn as many as 250,000 Panamanians and local environmentalists on to the streets, with Panama’s major roads frequently blockaded, including access roads to the major container terminals at either end of the canal.

Some local environmental campaigners have additionally claimed that the water used by First Quantum in the copper extraction process has contributed to the low water levels in the canal, although the company denies this.

The Loadstar is known at the highest levels of logistics and supply chain management as one of the best sources of influential analysis and commentary.

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