Canal offers incentives to Neopanamax on return journey south

By Franklin Castrellón

The Panama Canal Authority (ACP) has formulated a proposal to modify the toll system which, on the one hand, provides incentives to Neopanamax vessels on their partially empty return voyage to the South Pacific. On the other hand, the ACP reassigns the container/loose cargo vessels from its classification in the “other” segment to the general cargo segment, which will generate savings for these types of vessels for using the Panamanian route. The latter use is basically for transit through the old locks designed for Panamax ships.

The proposal includes an increase in tolls applied to liquefied petroleum gas (LPG) and liquefied natural gas (LNG) vessels due to the additional resources required for them to transit, but provides for an incentive for ballast return travel.

The Neopanamax ships will receive incentives, if they use the Panama Canal on its return trip.

The Neopanamax ships will receive incentives, if they use the Panama Canal on its return trip.

Announcing the proposal after a consultation trip among the main Canal users, which resulted in important adjustments to the original project, ACP administrator, Jorge L. Quijano, said the public hearing will be held on Wednesday, July 5, 2017, in the amphitheater of the Miraflores locks and that the new tolls structure is expected to enter into force on October 1, 2017. Before this, it must be approved by the Cabinet.

The application of the incentive for Neopanamax container ships depends on the percentage of utilization with respect to their capacity. “At least 70% of the capacity is required,” said ACP Vice President of Planning and Business Development, Oscar Bazán, after stating that “empty containers transported on the ship during transit will not be counted for the determination of the percentage of use of the vessel”.

In order to qualify for the benefit, the full round trip of Neopanamax ships should not exceed 25 days. But to promote the use of auxiliary maritime services offered in Panama, the ACP will not include in the computation the additional days that the vessel requires for port activities here.

As for the impact, Bazán put the case of a Neopanamax with capacity for 9,000 TEUs which, under the new scheme transits northwards on October 1, 2017 with 6,500 TEUs (72.2% of capacity) with cargo and 1,500 empty. That ship travels to ports on the Atlantic coast and returns to transit south on October 28, 2017, carrying on board 4,000 TEUs with cargo and 2,000 empty TEUs. That ship would save $40,000 on its return trip to the south, a decrease of 6.8% over what it would pay today.

The president of the Panama Chamber of Shipping (CMP) Rommel Troetsch, considered that “it is a good market strategy” that should attract to the Panamanian route for large ships that after transiting to the Atlantic, prefer to make the return trip without charge by the route around Cape Horn. This is a favored practice caused by low fuel prices today.

Container/loose cargo vessels

For container/loose cargo vessels, which are currently classified as “other”, migrating to the “general cargo” category, represents a lower rate, whether they are loaded or in ballast. This initiative, Bazán said, was suggested by customers during the consultation period in the last proposal for changes to the toll regime presented in 2015.

He explained that this measure seeks to encourage the mixing of ships or transits in the old Panamax locks. “The ACP is expected to benefit from increased volume of such vessels which, in turn, will benefit from a lower rate,” he said.

“Outside the proposal framework, other initiatives are being evaluated to address some of the concerns raised by the industry, such as the management of alliances and the transit reservation system,” he added.

On gas vessels, the official said that shipowners and operators of such vessels – as the rest – will have the opportunity to present their comments until Monday, July 3, 2017, at 4:15 p.m. “The proposed adjustments comply with the criterion of maintaining, at all times, the competitiveness of the route through the Panama Canal,” concluded Bazán.

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