NEW SYSTEM CLOSES LOOPHOLE AND ALLOWS PAYMENT FOR ON-DECK CONTAINERS;
BASED ON RECOMMENDATIONS FROM THE SHIPPING INDUSTRY, IMPLEMENTATION WILL BE PHASED-IN OVER THREE YEARS
PANAMA CITY, Panama, February 16, 2005 – Following a recommendation from the Board of Directors of the Panama Canal Authority (ACP), the Cabinet Council of the Republic of Panama today approved a new measurement and pricing system for full container vessels and other vessel types with on-deck container carrying capacity.
“The bottom line is that we simply closed a loophole that prevented us from charging for containers carried on-deck,” said Administrator/CEO Alberto Alemán Zubieta. “Today, with some ships carrying more containers on-deck than in the ship’s belly, this new system is more equitable, more transparent and will provide the Canal with a fair price. Considering other shipping options, the Canal is still the best deal in the industry.”
The ACP included in the revised system several recommendations from informal and formal consultations with representatives from maritime associations, shipping lines, foreign governments and Panamanian citizens. These include simplifying the pricing system and developing a single rate per TEU in accordance with industry standards; adjusting the on-deck TEU capacity to reflect ACP visibility restrictions; phasing-in implementation over three years; beginning the new system in May 2005 (instead of January 2005); and modifying the toll structure so container vessels in ballast (not carrying containers or any other cargo above or below deck) are charged less.
The new system will reflect international standards for measuring a container – the Twenty-Foot Equivalent Unit (TEU), which is 20’x 8’x 8.5’ in size. Taking into account the visibility restrictions imposed by the Canal that limits the height of on-deck containers, full container vessels will be charged based on the total number of TEUs the vessel can carry fully loaded, replacing the current Panama Canal/Universal Measurement System (PC/UMS) tonnage. The $54 per TEU charge is equivalent to the ACP’s initial proposal to charge $40 per TEU for the on-deck capacity plus the under-deck PC/UMS tonnage. For other vessel types with on-deck container carrying capacity, the current PC/UMS system will be used to measure spaces below-deck and the TEU toll will be applied to the actual number of containers on-deck. The new system will bring the ACP on par with international standards held by the container industry and enable it to receive a fair value for its services. It will also provide a more accurate measurement and offer increased transparency to Canal users and their customers.
Along with this revised system comes a new booking rate for full container vessels. The new rate is now $5.30 per TEU, which is equivalent to the total number of tons of a container (13.6) multiplied by the current booking fee of $0.39 per PC/UMS tons. The present booking fee will be maintained for vessels that reserve prior to May 1, 2005, for transits that take place up until April 30, 2006.
The difference between the average price per container transiting the Canal now and the price by May 1, 2007, of $54 is approximately $20. This increase should not have a significant impact on the cost of any product that is transported in containers, particularly when compared to the increases in freight rates that the shipping industry has recently implemented, which range from $200 to $300 per TEU. Furthermore, because of the phased implementation, the rate increase in May 2005 amounts to less than $10 per TEU.
The revenues generated by the new system will help fund initiatives under the permanent modernization program.
Revised Measurement System – Q&A
ACP Fact Sheet
About the Panama Canal Authority
The Panama Canal Authority is the autonomous agency of the Government of Panama in charge of managing, operating and maintaining the Panama Canal. The operation of the Panama Canal Authority is based on its organic law and the regulations approved by its Board of Directors. For more information, please refer to the Panama Canal Authority’s Web site: www.pancanal.com.
The Authority’s responsibility to the Panamanian people is paramount. The Canal belongs to the people and benefits from the Canal should accrue to as many Panamanians as possible. The Authority will plan its future so that it will continually contribute to the economic development and welfare of the citizens of Panama. For nearly 90 years, the Panama Canal has served as the global gateway – a pathway for the shipment of major world commodities. Since the end of 1999, the ACP assumed the responsibility for the management, operation and modernization of