Panama vows to implement shipping tolls

By Robert Wright in London - The administrator of the Panama Canal has vowed to press ahead with a programme of steep toll increases despite complaints that they are aggravating the shipping market crisis. Alberto Alemán Zubieta told the Financial Times that traffic through the canal, which links the Pacific and Atlantic oceans via an 80km waterway, had held up well during 2009 despite sharp toll rises. Figures released last month showed passages through the canal were only 2 per cent lower last year than in 2008. However, he acknowledged that the mix of traffic had changed sharply. The proportion made up of container ships, which have faced the biggest toll increases, has fallen over the past year, while there are higher numbers of bulk carriers loaded with grain. The toll increases are to help fund the $5.25bn (€3.7bn, £3.3bn) expansion of the canal, which will double capacity and hugely increase the size of ship able to use the waterway. The project, due to be completed for the canal's centenary in 2014, would be completed on time and under budget, Mr Alemán Zubieta said. He argued that excessive ship ordering and a slump in demand for their services, rather than high canal tolls, had created container lines' problems. The canal's revenues so far this year are 10 per cent above last year's level because of the toll increases. Following its takeover of the running of the canal 10 years ago, Panama has sought to maximise earnings from the waterway - the tiny country's main strategic resource - and develop it into an important logistics hub. The US, which built the canal and ran it for its first 85 years, sought only to cover operating costs. The largest container ships able to use the canal now pay nearly $320,000 for each transit, after tolls for the vessels more than doubled for container ships over in the past five years. Denmark's Maersk Line, the world's biggest container line and the canal's largest customer, has been among users demanding cuts in the tolls.

Editor's Comment: For the managers of the Panama Canal this is really the definition of a no-brainer. First, you find out how much it costs a ship to go all the way around South America, or to ship the same goods via another alternate route - such as dropping them into the West coast of the US and moving them inland by rail. As long as the Panama Canal is the most cost effective route then the ACP can hike the toll rates as much as they want. The shippers will grumble but eventually just pay the rates and pass the expenses on to their customers. So guess what - your new 58" plasma television costs $5 bucks more because Sony had to pay more to get it through the Panama Canal. Deal with it. It still would have cost $10 bucks more if it went around South America so Panama remains the best value. Within our lifetimes Panama will become the richest country in Latin America (expressed in terms of percentage of GDP per capita on a PPP scale) thanks to the revenue from the current as well as the greatly expanded Panama Canal. Who needs oil when you have the Panama Canal, eh? Ka-ching! Now, shut up and write the damn check - Mama needs a new pair of slippers...