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MSC Slaps Surcharge on Boxes Through Restricted Panama Canal

The Loadstar
Total Views: 3140
November 24, 2023

By Alexander Whiteman (The Loadstar) –

MSC has slapped a bumper $297 per teu surcharge on shipments transiting the Panama Canal in response to the increasing capacity reductions.

It followed the announcement on Tuesday by CMA CGM of a $150 per teu ‘Panama Adjustment Factor’, valid from 1 January. MSC’s surcharge, almost double that of the French carrier, will begin two weeks earlier, on 15 December.

MSC told customers: “During Q2 23, the Panama Canal Authority decided to reduce draught from 14.94 metres to 13.41.

“Despite several measures to conserve water, taken over the last months, lack of precipitation in the area is affecting the water level of the canal. Consequently, the canal authority has recently confirmed further restrictions regarding the number of vessels crossing the canal.

“These restrictions, combined with the increase of the canal tariff implemented earlier this year, are having a direct impact on overall MSC operations costs.”

An analysis conducted by the Loadstar Premium team last week suggested that with a reduction to 18 transits a day, expected from February, daily capacity through the neopanamx locks of the canal could be less than 50% of design capacity.

And, with little sign of improving weather, Maersk warned shippers that, while its advanced planning was sufficient to mitigate potential delays, they should prepare for other issues. 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 also noted it had secured access to blocktrain services between Balboa and Cristobal, “enabling alternative container transport options”, but stressed these were “limited”.

Holding true on the maxim that when it does rain, it pours, public protests across the country over Canadian mining company First Quantum’s plans to extend the Cobra Panama copper mine into virgin rainforest have compounded transport issues.

Protests, drawing up to 250,000 Panamanians and local environmentalists to the streets, have resulted major blockades, including access roads to box terminals.

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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