Panama Canal rules out that its restrictions impact merchandise prices

He Panama Canal plans to operate 30 to 31 daily transits in the fiscal year that will begin next October 1, below the current 32, but ruled out that these restrictions derived from the water crisis will impact final prices, generating inflation in the destination markets, especially cargo that goes in containers.

The operation of 30 to 31 daily transits established in the 2024 fiscal budget is a “modest projection” and even “more low”than the 32 crossings imposed since last July 31 as a measure to save water, said this Tuesday the administrator of the Panama Canal Authority (ACP), Ricaurte Vásquez, in a meeting with the press.

The prolongation of the drought in the country this year and the arrival of the El Niño phenomenon, which exacerbates the lack of rain on the isthmus, forced a reduction in both daily transits, from 36 in optimal conditions to 32, and draft ( the submerged part of the ship), which is 44 feet out of a maximum of 50 that the track offers.

The restriction of transit has caused a traffic jam in the canal, the only freshwater canal in the world that unites the Atlantic and Pacific oceans, especially for ships that do not have a reservation, that is, without a scheduled crossing, which in the vast majority They are bulk carriers, gas carriers, chemical carriers, among others.

This Tuesday afternoon there were 126 ships in line to transit the highway, which are waiting an average of five and a half days to cross, although there are cases in which this figure rises to 14 days, explained Vásquez.

But “there have never been 200 ships” in line, as some media have indicated. The largest number was recorded on August 9 and there were 163, said the administrator, who stressed that in high season the canal registers about 120 vessels waiting and in low season 72.

Market forces define auction value

The canal maintains an auction system so that vessels without reservation can access a transit. This is an additional cost to the toll whose value is given by the market, said Vásquez.

It is these market forces that are attributed to the fact that a gas carrier has paid US$ 2.4 million to access the auction, a figure “exceptional“, because the average cost is US$500,000 for the Neopanamax locks, those of the operational expansion since 2016, and 260,000 for the Panamax locks, smaller and inaugurated in 1914, he explained.

“There is no priority established in the process of going to the auction (…) some may attribute that the channel, being a public service, is abusing the (auction) price. It is not like this. Who defines the price paid is the client”according to their particular need, Vásquez added.

Zero impact on final prices

The administrator denied that the current situation of the canal impacts the final price of goods, especially those transported in containers, which represents the Four. Five% of the business of the road on which it passes around the 3% of world trade.

The Panama Canal handlesMore than 50% of the containers that arrive on the East Coast of USA.“, but the price of this transit “for a container ship within the value of the cargo when it arrives at the port of destination is less than half of the 1% of the cost of moving the cargo and the price set in the destination price”.

From the point of view of containerized cargo “The Panama Canal has not affected the market (…) we understand that and we have discussed this not only with the shipping companies, which are our direct clients, we have discussed this with the clients of the shipping companies who are the owners of the cargo.”Vásquez stated.

Source: EFE