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"What we're looking for is not to simply to cover the value that the route offers right now, but instead the much greater value that a widened canal will have," said canal administrator Jorge Quijano.

The proposal, Quijano said, will most likely differentiate between vessels that continue to use the existing canal and those using the widened route.

Authorities are looking into alternatives to the current per-TEU charges (a maritime transport unit equivalent to one 20-foot container) that could attract a greater volume of cargo without necessarily raising costs for users.

During the 2011 fiscal year, 14,600 ships carrying 322 million tons of cargo passed through the canal linking the Atlantic and Pacific, generating $800 million in revenue for Panama, or about two percent of its GDP.

Last year, more than 333 million tons of cargo passed through the canal.

The widening project, slated to be completed by 2015 -- six months behind schedule -- will allow the canal to accommodate ships with a capacity of up to 12,000 containers -- larger than 5,000-container ships now able to traverse it. (AFP)

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Maersk Line will send vessels through Suez Canal that can carry as many as 9,000 20-foot boxes at a time, instead of using two 4,500-box-vessels through Panama Canal, Soeren Skou, chief executive officer of Maersk Line, said in Singapore today. The last sailing through Panama will be on April 7 and the first service through Suez will be a week later, the company said in an e-mail statement.

“The economics are much, much better via the Suez Canal simply because you have half the number of ships,” Skou said. “One of the reasons for why this is happening now is that the cost for passing through the Panama Canal has gone up. At the end of the day, it comes down to cost.”

Shipping lines, including Maersk Line and Neptune Orient Lines Ltd., have cut costs, reduced speed of their fleet and sold some vessels to contend with freight rates that are below break-even levels. Maersk Line, based in Copenhagen, has said pressure on charges will remain this year.

Fees for ships to go through the Panama Canal have tripled in the past five years to $450,000 per passage for a vessel carrying 4,500 containers, Skou said. The distance from China to the U.S. east coast via the Suez Canal is about 4 percent to 5 percent more, he said.

A $5.25 billion expansion of Panama Canal, the waterway handling 5 percent of global trade, will open by June 2015, six months later than originally planned. The canal connects the Atlantic and Pacific oceans and is used by as many as 14,000 vessels a year.

Whether Maersk will use the Panama Canal after the expansion will depend on the economics, Skou said. (maritime-executive.com)

Castillo said there is no conflict of interest in her appointment, because of the nature of the business activities of the company she runs in the waters of the Panama Canal.

She is the manager Naves Supply, a company collects garbage and sewage from ships that arrive at the port of Balboa, and those transiting the waterway.

She said according to law, in order for there to be a conflict of interest, her company would have to have business contracts directly with the Panama Canal Authority itself.

However, the entrepreneur said she does not have any such contracts, nor is she a subcontractor for the Panama Canal Authority.

"My clients are the owners of the ships. I do not receive a penny from the ACP," she said during an interview on the Telemetro morning news broadcast.

Career - Castillo said she was not born in a "cradle of gold".

She said she has succeeded with her "own work and effort," in a maritime business full of men.

In that sense, she said the Panamanian President Ricardo Martinelli chose for due to her career and experience in the maritime sector.

Given the criticisms that have been made, Castillo said: "I feel like any person would feel who is trying to stay afloat, and is pushed."

She Will Not Give Up Her Aspirations - Castillo said, if she is ratified for the post, she will not be drinking tea nor champagne in the Board of Directors or the ACP. "I'm going to be looking out for the interests of the Panamanians," she said.

She said the position on the Board of Directors of the ACP does not represent money, but rather it brings pride to her family.

With that, she said she would not give up her desire to occupy the position to which she has been assigned.

But she also said "if the President decides not to give me the position then that is his decision and I respect it."

"I'll wait to see what will happen," said the businesswoman, about the procedure that must pass in the National Assembly.

Ministers Defend Designations - The Presidency Minister, Roberto Henriquez, defended the recent appointments to the board of the ACP. In fact, Henriquez said there was no need for a big debate in the Cabinet, because they already knew these people.

He described Henri Mizrachi as a young entrepreneur. Meanwhile, Castillo is an entrepreneur through and through, he said. I consider them worthy, stated the head of the Presidency.

For his part, the Minister of Economy and Finance, Frank De Lima, said experience has shown that in this country, they are always looking for the "fifth leg of the cat."

However, he stressed the fact that none of the three people who were appointed to the Board of Directors of the ACP were members of the ruling Democratic Change political party. (Prensa)

In this lawyers, associations, and members of the civil society are in agreement, who expressed concern yesterday after the Cabinet appointed Henri Mizrachi, Alberto Vallarino, and Lourdes Castillo to the Board of Directors of the Panama Canal Authority.

Henri Mizrachi is the Director of the EPASA Editorial Group. This is the company which publishes the pro-government Panama America newspaper, as well as the La Critica and Dia a Dia tabloids.

Alberto Vallarino is the former Minister of Economy and Finance and member of the Panameñista political party, whose name at one time was being floated as a potential presidential candidate for the Cambio Democratico party in the 2014 elections.

Lourdes Castillo is the manager of the company Naves Supply, which has been granted government contracts to dispose of medical waste in Panama.

One of the first groups that expressed concern was the Chamber of Commerce over the little information that is known about the trajectory of the new directors of the ACP.

In a statement, Irvin A. Halman, President of the Chamber of Commerce, said that the Board of the ACP is the highest level of governance of this important company, locally and internationally, so (the government ) should have taken the opportunity to "make appointments to integrate people with prestige, experience and a proven track record."

The primary point of disagreement with the decision made by the Cabinet is precisely that - the experience of those who have been designated.

Roberto Troncoso, president of the Panamanian Association of Business Executives, believes that the Directors of the ACP should bring with them a certain profile: they should be people who are qualified because - he said - they will not be leading just any entity, but rather one of the institution that provides one of the highest amounts of revenue to the state.

But Mariano Mena, of the Front for the Defense of Democracy, strips the appointments in a more radical perspective, saying "the three new directors belong to the inner circle of President Ricardo Martinelli."

The activists explains "Alberto Vallarino was named because he is from the inner circle of the former president Mireya Moscoso, and in that way he (Martinelli) intends to start some sort of rapprochement with the anti-Varela faction (of the Panameñista political party)."

In the case if Henri Mirzachi, reasons for his designation abound, says Mena, "he is the one behind the government newspaper owned by the president."

Following on with Lourdes Castillo, Mena asks "Who is she? What are her merits? What is her background?"

The opposition leader said that once again the Government is sending a bad message to people, because it seems that the government cannot see beyond, to appoint citizens who are capable of bringing the future of the Panama Canal to a good port.

With these appointments, says the businessman Roberto Eisenmann, "the autonomy of the Panama Canal is compromised," because President Martinelli now has appointed the majority of the members of the Board of Directors of the Panama Canal Authority, an entity that historically has stood for independence from the Organs of State.

In fact, Eisenmann is not mistaken. Of the eleven directors, six have been appointed during the present Government: José Sosa, Marco Ameglio, Nicolás Corcione, and the three most recent appointments.

To this list is added Roberto Roy, who was appointed as Minister of Canal Affairs, and in that role he also serves as a member of the Board of Directors of the ACP.

To this total add Rafael Barcenas, who was appointed by the National Assembly but with the backing of the ruling Cambio Democratico party.

Another person who was consulted on this issue was the former president Mireya Moscoso, who only referred to the appointment of Vallarino, saying "it's a good appointment. He has the experience and he will bring a lot to the Canal," but she declined to make a comment on the appointments of Mizrachi and Castillo. (Estrella)

Editor's Comment: Lourdes Castillo filed a complaint for slander and defamation against the La Estrella newspaper in May 2011 over an article they published about her company. In fact Alberto Vallarino did a great job as the Minister of Economy and Finance, and he "almost" decided to stay with the government of Ricardo Martinelli after the breakup of the alliance between the Panameñistas and the CD in August 2011. So yeah, there's no doubt that Martinelli is trying to create a wedge between Juan Carlos Varela and the rest of the members of the Panameñista party. He might not get all of them, but he will get some of them. He only needs enough of the CD party faithful, most of the Molirena, and a smattering of Panameñista party defectors to beat the PRD in 2014. The appointment of Mizrachi is clearly payback for allowing the Panama America newspaper to become the official voice of the government, as a counter balance to the La Prensa and La Estrella. Anyway, Martinelli now has complete control over the Board of Directors of the ACP with eight out of eleven seats.

The canal is investigating charging fees based on the cargo capacity of commodity carriers and tankers hauling fuels including liquid gases,

Panama Canal Authority Administrator Jorge Luis Quijano said in a telephone interview Jan. 17. The proposed system would replace an existing toll-setting mechanism that doesn’t always reflect cargo capacity, he said.

Expanding the 99-year-old, 80-kilometer (50 miles) waterway to accommodate bigger ships will cut freight costs for energy- fuel cargoes and open new trade routes if the fees are set correctly, he said. The canal is used by 14,000 vessels a year, carrying 5 percent of world trade, according to its website.

“We have taken our lenses off and put on some new lenses and are trying to look at our business in a different way,” Quijano said. “The economies of scale that the big ships bring in is a benefit to the shipping line and is a benefit we want to share in. It’s not that we want to eat it all, we want to take a piece of that.”

The authority is consulting canal users about the proposed changes, including meetings with associations representing owners of tankers and dry-cargo vessels in London next month, he said. The new fee structure will be announced by February 2014, for implementation by 2015, he said.

The Panama Canal Universal Measurement System, the existing method, uses a formula that doesn’t always take into account how much cargo ships can hold, according to Quijano. The canal changed its price structure in 2005 for container ships, with fees now based on how many 20-foot steel boxes the vessels can carry, according to the authority’s website.

The expansion will deepen and widen the canal, adding a third set of locks, and open for commercial transits by June 2015, six months later than first intended, Quijano said. Loans taken out to pay for the expansion need to be paid off by 2028, he said. (Bloomberg)

The purpose of the agreement is to promote trade between the port of Antwerp and the West Coast of South America via the Panama Canal. In view of the positive evaluation of the first agreement, made in 2010, the new agreement will run for a period of five years, after which it can be further renewed.

The first collaboration agreement, signed two years ago, was the first of its kind to be signed by the Panama Canal Authority with a European port. It covered among other things joint marketing initiatives, the exchange of market studies and the setting up of training programmes. Further, information was exchanged on the handling of very large vessels: a unique feature of both the port of Antwerp and the Panama Canal.

The collaboration between the two authorities has been evaluated as positive. For example, the new locks on the Panama Canal are based on the Berendrecht lock in Antwerp, the largest in the world. Also, the Panama Canal will use tugs for steering ships across the new lane that is currently being built. For this purpose the Panama Canal pilots followed training courses in Antwerp.

Trade with South America via the Panama Canal is very important for the port of Antwerp, amounting to some 4.7 million tonnes annually. Every week there are seven liner services passing through the Canal on their way to or from Antwerp. Furthermore the volume of trade between South America and Europe is expected to grow in the future, as the Canal is being deepened and widened to handle larger vessels.

The renewed collaboration agreement was signed by Administrator Jorge L. Quijano for the Panama Canal Authority and by CEO Eddy Bruyninckx and chairman Marc Van Peel for Antwerp Port Authority. (Dredging Today)

This was announced by Jorge Quijano, ACP Administrator, during the speech that started the First International Congress of Maintenance, which will be based on a culture of performance, maintenance and sustainability of enterprises, and develop three themes: reliability and maintenance, maintenance management, and maintenance technology.

The exhibitors from the United States, Chile, Costa Rica, Colombia, Mexico, Brazil and Uruguay, emphasize practical experiences and modern approaches to maintenance management in Panama and elsewhere.

Quijano hoped with the conference they will receive "a new culture of maintenance in Panama and the world." (Panama America)

Editor's Comment: It's important to note that all $200 million spent by the Panama Canal Authority to maintain the Panama Canal every year stays right here in Panama. The money comes into the ACP from the tolls paid by ships to pass through the canal, and this part of that money gets inserted in an indirect manner into the broader Panamanian economy. When the Panama Canal expansion project is complete, then this number will probably about double every year. No matter, because it's just more money to flow through the Panamanian economy.

The ship was Northbound in the Panama Canal, and has just about to clear the area of the Culebra Cut and head off through Lake Gatun. For some reason the pilot lost control of the vessel, and it veered to starboard (right), and was heading right towards the bridge.

The pilot ordered full reverse and dropped the starboard anchor, in an attempt to halt the ship as quickly as possible. In the video below, you can see the smoke pouring from the front of the ship, thanks to the emergency deployment of the anchor.

The ship came to a halt and then slowly backed away from the bridge, with about one meter to spare.

Editor's Comment: Thanks to Paul Stern for bringing this incident to my attention.

Copyright 2012 by Don Winner for Panama-Guide.com. Go ahead and use whatever you like as long as you credit the source. Don't forget to follow Panama Guide on Twitter. Salud.

The operation is being performed because Lake Alajuela has reached it's peak level, and Lake Gatun is approaching peak.

Because of this operation the ACP has issued a warning to the populations of the communities located on the banks the associated rivers and reservoirs of the waterway, and they should be alert to the sound of sirens warning 15 minutes before, on the opening operation of the gates of the spillways to release water. (Panama America)

Editor's Comment: And, the ACP is also expecting more heavy rainfall over the next few weeks, as it always happens in mid November through early December. In an earlier article I recently said the Chilibre Water Treatment Plant draws water from Lake Bayano. That was a mistake. It's Lake Alajuela.

This figure represents an increase of 11.6 million Panama Canal tons or 3.6 percent compared to the 322.1 million tons registered last year, and also surpasses the previous 2007 record of 312.9 million tons. Under PC/UMS, a mathematical formula is applied to the vessel’s total volume or cargo carrying capacity.

“This milestone attests to the reliable and continuous service offered by the Canal, which is supported by a workforce of 10,000 men and women,” said ACP Administrator/CEO Jorge Luis Quijano.

“The Panama Canal works tirelessly to provide its customers with first-rate service, including new products and services in response to their evolving shipping and maritime needs.”

During fiscal year 2012, Canal Waters Time (CWT) averaged 25.66 hours. The top market segments during this fiscal year were full container vessels with 119.8 million Panama Canal tons, followed by dry bulk carriers and tankers, which were registered at 83.4 million Panama Canal tons and 51.6 million Panama Canal tons respectively.

The Panama Canal’s fiscal year runs from October 1st to September 30th.

According to a statement from the Panama Canal Authority (ACP), container ships, bulk carriers and ships, were the segments of the market with the largest movement, generating 119.8, 83.3 and 51.6 million tons respectively. PC/UMS is the Universal Measurement System/Panama Canal, the system used to measure the volumetric capacity of cargo ships transiting the waterway. (Panama America)

Jorge Luis Quijano - New Administrator of the Panama Canal

The new administrator said as soon as he was informed of the Board's decision, he understood the appointment as the new Administrator of the Panama Canal was a recognition, not to him, but rather of the work of the men and women, who for so many years have made the Panama Canal a cause for national pride and international exclamation. He similarly praised with enthusiasm of the appointment a professional engineer such as Manuel Benítez as the new Deputy Administrator.

Quijano said he now assumes the responsibility, convinced that with a broad vision, hard work and strong determination, dreams can come true. Moreover, he added that the future of the Panama Canal is full of challenges, which certainly will not be easy, but that history has taught that "nothing has never been easy in relation to the Canal. It's titanic construction was not, nor was regaining our sovereignty and the administration of the canal, nor showing the world we could handle it effectively and efficiently, tilting its mission to bring wealth to our country, and to contribute to our welfare through its management, development, progress and improving the quality of life for all Panamanians," he said in his speech.

"Today the Canal expansion is in full implementation and within a few years Panama will offer the world and herself, new opportunities for growth and productivity. In this way we are preparing to capitalize on the first day of the full potential of our new canal, and it requires the confidence that the majority of Panamanians placed in us during the referendum of 22 October 2006," said the new administrator.

Jorge Luis Quinajo, be in office as the Administrator of the Panama Canal for a period of seven years. (Estrella)

Editor's Comment: I love freudian slips. They're so revealing. This morning, in his speech as the outgoing, former Administrator of the Panama Canal, Alberto Alemán Zubieta was saying goodbye as he left office. He was recounting some of the more important and memorable moments of his time at the helm of the ACP. When he started talking about the national referendum during which the Panamanian people decided to go ahead with the expansion of the Panama Canal, he started to say "and the people gave us their vote..." but then he stopped in mid-sentence, caught himself, and said the same thing but with different words. Meaning, today, at this moment in time, he didn't want to say anything related to politics, elections, political races, and he sure as hell didn't want to say something like "...and the people responded by backing me up with their votes..." Whoops. Your freudian slip is showing. Rumors are running hot and heavy that the CD is trying very hard to recruit Alberto Alemán Zubieta as their presidential candidate for the 2014 elections. In fact the CD does not have a very strong option who might be able to replace Martinelli at the helm, and many people recognize Alberto Alemán Zubieta would almost be a walk-on favorite to win - given his 16 years of executive experience, name recognition, and accumulated respect. Yeah, the CD is salivating at the prospect, no doubt about that. Well, Ferrufino and Burrillo might not be to happy about it, but them's the breaks.

From 1996-1999, he served as the Administrator of the former Panama Canal Commission - the federal agency of the U.S. Government, which was responsible for the administration and operation of the Panama Canal until December 31, 1999. During the following years, he served concurrently as the Administrator of the Panama Canal Commission and the ACP, ensuring that decisions made under the Commission continued under the new Canal Authority. In 2005 the Board of Directors re-elected him to continue to lead the ACP until August 2012. (Panama America)

Editor's Comment: There are some who have mentioned the possibility that Alemán Zubieta might make a good presidential candidate for the Cambio Democratico political party. Considering that he has more than 16 years executive experience running the Panama Canal, and that he also has instant name recognition, he would be an instant "walk on favorite" and would probably win easily in 2014. In short, he would be a great pick, if the CD could recruit him.

Editor's Comment: As a result of this budget, the Panama Canal will be paying just over $900 million into the coffers of the Panamanian government in profits. The rest will be spent on operations, maintenance, and the expansion of the Panama Canal. Once the expansion is complete in a couple of years, the Panama Canal will be making about $2 to $3 billion dollars per year in profits for the government of Panama. Also known as Metro Line 2, Metro Line 3, etc. Over the next five years the annual budget for the Panamanian government will creep up to about $20 billion per year. From 2014 - 2019 the next government will oversee the spending of a total of about $100 billion dollars in state funds. And, that's what the politicians are fighting over. Who gets to control the spending of that money. Yeah, sure, flag, country, patria, poor people, kissing babies, etc. It really comes down to the money. The people in this photo are smiling because they are the ones who are currently spending the money. It makes them happy.

The Executive Vice President of the Administration and Finance Department of the ACP, Francisco Miguez, said the budget includes 39 projects of continuity and 66 new projects that range from the replacement of cranes, floating equipment, and new computer systems to bring ACP computing platforms to the highest standards. It also includes continuing the normal dredging performed in the Culebra Cut, rehabilitation of floodgates, work on the approaches and the widening of the waterway, which are part of the maintenance and improvements.

The budget also includes major new projects, such as the new bridge on the Atlantic side of the Panama Canal at a cost of approximately $277 million dollars, a project that is about to open for bids. Another project will be the building of a site (landfill) to avoid flooding when Gatun Lake exceeds its capacity, a project in the initial stages, at present the feasibility study, location, size and technical characteristics, among others, for $186 million dollars.

The Panama Canal expansion project is 43% complete, and to give continuity to the project costs are budgeted in the order of $1.044 billion dollars - divided in administering the program for $24 million, $902 million for the locks, $49 million for the Pacific approach, $28 million for dredging, and $40 million for water supply.

Revenue - The ACP has budgeted toll revenues on the order of $1.8367 billion, representing 77% of the total. The Panama Canal will also receive $392.9 million for services related to traffic, revenues mainly from the production of water and electricity for $134 million, and another $17.4 million in interest income.

Transits - Projections made to design the new budget reflect transits through the Panama Canal will remain at levels similar to those of 2012, a decrease of 0.7% or 2.4 million tons in the amount of capacity PC / UMS (Universal Measurement System of vessels). In 2012, total recorded was 332.5 million this fiscal year and it is estimated that in 2013 will be 330.1 million.

According to Francisco Miguez, this year 332 million tons are forecast, however, "we are seeing the end at 329 million tonnes, which is not very different from the estimate, which is a normal variation in this industry." He said that for 2013 there are predicting 330.1 million tons, which means that there is very little growth from year to year, mainly because it is a reflection of how the economy is behaving globally. He said "the major markets that transit through the waterway are gradually emerging from a recession, with some uncertainty, mainly by events in Europe." He said the economic and financial crisis in different European countries and the United States have a situation that "could be cataloged as structural weakness of a post recession from a year and a half ago, which impacts on international trade in several ways, including maritime traffic." "We see very modest growth next year in terms of both tonnage and contributions to the state," said Miguez during his presentation. (Panama America)

Editor's Comment: The 2012 - 2013 ACP budget predicts the Panama Canal will generate about $940 million dollars in profits that will be turned over to the central government's coffers. Once the newly expanded Panama Canal opens sometime in 2015 (probably) those numbers will about double - and the Panama Canal will be generating about $2 billion dollars per year in profits for the nation. This is remarkable when you consider that, in 1977, the entire GDP of the whole country was about $2 billion dollars (now more than $30 billion). So from 1977 to 2011 the total size of the Panamanian economy has increased by 1430%. By comparison, in the same period of time, from 1977 to 2011, the total size of the US economy has increased by 650%. The performance of the Panamanian economy has been - in a word - astounding.

Although JSA appreciates this action, it is very marginal and does very little to obviate the cost penalties to the shipping industry which will apply if the ACP plans are implemented in their present form, especially under the current circumstance where shipping companies were beset by operating losses during the adverse economic environment of 2011, that exceeded $6 billion.

JSA noted that Panama Canal’s toll increases for 5 years from 2006 to 2011t already took sizable increase; for container vessel by 63.6% (10.4% per year), similarly, tanker tolls up by 51 %(8.6% p.a.), where both dry bulk and car carriers tolls increased by 46.5 & 46.3% (7.9% p.a) with proposed increases in 2012 & 2013 to apply on top of those earlier increases.

JSA is deeply disappointed with this outcome, because it does not respond in any shape or form to its previous requests which were that the Panama Canal Authority to withdraw its proposal for toll increases in 2012 and 2013.

Panama Canal should review the current consultation process in favor of a sufficient consultative dialogue that establishes toll adjustment guidelines that are stable, reasonable and transparent over an agreed longer and mutually-agreed upon period of time.

Under the “Proposals for the Expansion of the Panama Canal,” the canal expansion costs could be recovered within several years after the expansion work is complete, and our study indicates that it can be possible without such extensive and frequent toll increases, said JSA.

The Panama Canal’s current pricing policy of constantly increasing tolls imposes an unduly excessive burden on canal users, said JSA.

JSA urges the Panama Canal Authority to rescind the revised proposal, and hold a substantial consultative dialogue with maritime representatives on long-term pricing guidelines, with the aim of making them stable, reasonable and transparent.

Although there is a substantial distance between JSA’s position and that of Panama Canal regarding the toll issue, JSA sincerely believes, on the other hand, that such mutual and constructive consultations could establish a win-win relationship between both Panama Canal and Canal users, whereby such constructive dialogue could also address an issue of increasing the efficiency of the Canal’s operation.

JSA stressed that it is ready to contribute actions for enhancing a more efficient operation of the Canal through closer dialogue, which could lead to increasing the long-term value of the Canal and the number of transiting vessels with stable Canal tolls.

“Our request to hold closer dialogue would also present a positive answer to concerns of the Japanese government, which filed its comments in May 2012 urging the Panama Canal to take into account the Canal users’ opinions and also took up the issues at several inter-government meetings where the same concerns were shared among the maritime administrations of the relevant countries,” said JSA.

The initiative, approved by 85 of 91 lawmakers, establishes a legal system for the proposed 200 kilometer (124 mile) long canal that would link the Atlantic and Pacific oceans. Plans to build a canal across Nicaragua date back centuries, but were overtaken by the construction of the Panama Canal which opened in 1914. In recent years successive Nicaraguan governments have revived the concept as a way to promote development in the second poorest country in the Americas.

Feasibility studies are expected to cost $350 million dollars, while the actual construction of the new canal could hit $30 billion dollars. The government is proposing to raise the funds through a public/private partnership, with the state maintaining a 51% stake.

Project leader Eden Pastora said Nicaragua's canal, to be built along one of six proposed routes, would be larger and deeper than the Panama Canal. That vital waterway is currently undergoing a major $5.25 billion project to expand capacity. The upgrade, set to be completed in 2014, will allow some of the world's largest ships to pass through. The Panama Canal generated a record $1 billion for the government during fiscal year 2010-2011 and a total of $6.6 billion since the United States handed over control more than a decade ago.

Editor's Comment: First of all, Nicaragua is broke. They don't have either the money or the capacity to borrow money to build this $30 billion dollar project. Secondly, they want to keep a 51% stake. So what they are saying to potential investors is - come here, spend $30 billion dollars to build us a new canal in Nicaragua, and for your money you will get 49% of what you spent. This project is more than just a little risky for any potential investor. First of all, you're dealing with the government of Daniel Ortega and a bunch of left wing socialists. Secondly, the canal once finished would be more than twice as long as the Panama Canal, and any ships wanting to use it would have a choice - do we use the Panama Canal or the Nicaraguan canal. Panama would be in a very strong position to compete because by the time the proposed Nicaraguan canal opens (in ten years or more) the newly expanded Panama Canal would be open and operating. If there was a competing canal, Panama could simply drop their toll rates down to a point where every ship would first choose Panama, and then only use Nicaragua if there were no spots left in Panama. In short, the Panama Canal is already bought and paid for and there would be no need or pressure to have to charge enough money to pay for new construction - only to operate and maintain. Anyway, whatever. This plan is most likely nothing more than a Nicaraguan pipe dream. Smart guys with big calculators and a lot of money won't take the risk - because it's a loser on the math.

Copyright 2012 by Don Winner for Panama-Guide.com. Go ahead and use whatever you like as long as you credit the source. Salud.

The revised tolls adjustment will apply only to the following market segments: general cargo, dry bulk, tanker, chemical tanker, LPG, vehicle carrier and ro-ro and the segment known as others. Due to this modification, the ACP today is reopening the issue for public comment and will consider additional input, suggestions and feedback from interested parties over the next 15 days.

After receiving comments and feedback from the maritime and shipping industry during its official consultation period, the ACP responded to industry requests by modifying the proposal and postponing implementation of the new pricing. “The Panama Canal is the only organization in the shipping industry that consults with customers and interested parties prior to implementing any modification to its pricing structure. This open and transparent process has given the ACP an opportunity to listen to the needs of its customers and to adjust its proposal accordingly,” said ACP Administrator/CEO Alberto Alemán Zubieta.

After the ACP’s Board of Directors reviews the comments received during the 15-day period, it will make a final decision and submit its recommendation to the Cabinet Council of the Republic of Panama for its final approval. Prior to this announcement, the ACP held a consultation period (April 18, 2012 – May 21, 2012) and made the proposal available to all interested parties. The ACP received a total of 18 written submissions, in both English and Spanish, from representatives of countries, shipping associations, customers and other interested parties. The consultation period culminated with a public hearing in Panama in which seven representatives from shipping and government expressed their views during an open and transparent process.

Significant elements include the following: New Segments - The revised proposal increases the number of segments from eight to ten by Panama Canal vessel type. It also breaks down the tanker segment into three distinct segments and incorporates the roll-on/roll-off vessels into the vehicle carrier segment. Once approved, the Panama Canal market segmentation scheme will include the following segments: full container, reefer, dry bulk, passenger, vehicle carrier and ro-ro, tanker, chemical tanker, LPG, general cargo and others.

Price Proposal - Effective October 1, 2012 and October 1, 2013, respectively, the ACP proposes to increase the tolls for the following segments: general cargo, dry bulk, tanker, chemical tanker, LPG, vehicle carrier and ro-ro, and the segment known as others. The remaining segments -container, reefer and passenger - will not be adjusted at this time, nor will the price per TEU for containers carried onboard a vessel. Additionally, there will be changes to tolls applicable to small vessels based on vessel length, to incorporate adjustments not previously considered. (Press Release)

Alberto Alemán Zubieta - Administrator of the Panama Canal Authority

Necessary Process - Aleman Zubieta said the toll increase was not included in this year's budget, however that is part of establishing tolls. Meanwhile he said he was concerned about the situation in the world, because the global economy is not picking up as they expected, and that could impact the final tonnage in the last quarter of the fiscal period of the Canal. "We have a strong institution, and we will continue to develop the Canal (...) there is a Board of Directors which knows the policies the Canal should follow," he said. (Panama America)

Editor's Comment: They were going to implement these toll increases in July 2012, but now apparently the ACP has decided to delay implementation until October of this year. They have been discussing this for months, however some ignorant people have been trying to say these toll increases have something to do with the recently created budget shortfall, but in fact the two issues are not related.

The government of Nicaragua presented before their Congress a project to build a new canal a week ago, that would be an alternative to the Panama Canal that would unite the Atlantic and the Pacific through six tracks. The project would cost an estimated $30 billion dollars and there are six countries interested in financing the project, said the government of Daniel Ortega. The statements made by Henriquez are added to those of the Administrator of the Panama Canal, Alberto Aleman, who said "the project of building a canal through Nicaragua does not worry us, because competition is always good."

An estimated 5% of world trade passes through the 80 kilometers of the Panama Canal every year. More than a million ships have passed through its waters since it was inaugurated on August 15, 1914. The government of Panama received the Panama Canal from the United States in 1999 and since then the central government fund has received more than $6.5 billion dollars from Panama Canal profits. Prior to that, during the entire 86 years that the Panama Canal was administered by the United States, the government of Panama had only received a grand total of $1.8 billion dollars. The Panama Canal is currently being expanded for an estimated cost of $5.25 billion dollars, so that vessels carrying as much as 12,000 containers can pass through its waters. (Telemetro)

Editor's Comment: Let's see, can you name the six countries that would be interested in helping Nicaragua finance the construction of a new canal? You can start with Venezuela, but Hugo Chavez will probably be dead before the first shovel full of dirt is turned. Next up would be Iran - hey, maybe they can use their nukes to help dig the ditch? Then of course you can add the other two left wing nuts of Latin America - Ecuador and Bolivia. Any guesses on the other two? China's got the money. Hey, didn't France just go Socialist again? You know what happens when those dudes try to dig a canal... The bottom line is that this issue comes around every couple of years. They keep talking about it in Nicaragua, and they've been talking about it for decades. This isn't a new concept.

ICS argues that the industry was assured there would only be one small adjustment to tolls before completion of the expansion project in 2014. But, under the new proposals, toll increases could come into effect as early as 1 July 2012.

Meanwhile, ACP has responded to Port Strategy in defence of the toll hike proposal. Rodolfo Sabonge, vice president, market research and analysis, Panama Canal Authority, said to PS: “The ACP is fully aware that transportation, and logistics in general, has become a major differentiator in terms of competitiveness for different commodities and products, therefore, when it implements a tolls change, the Canal does it after a thorough analysis of all the factors that are affecting trade, including the fees charged by the Canal.” He added: “On several occasions, the arguments presented by the participants in the process have been taken into consideration by the Board when making its final decision.”

During the last toll change, the ACP Board of Directors changed the date of implementation of reefers’ tolls from January to April – affected parties had pointed out that the change in tolls would be made in the middle of the fruit season. This process is quite unique as not many service providers in the transportation industry formally allow their customers to express their views regarding price changes. (www.portstrategy.com)

Editor's Comment: The Panama Canal is now being run by the government of Panama, and right now the government of Panama wants more money to spend. It sees the Panama Canal as an additional source of revenue - which of course it is. Shippers have a choice. They can either pay the increased tolls or go around, which is more expensive. So in the end they will have to hike their rates and just as it always has been done, transportation costs will be eventually passed down to consumers. Shippers can bitch and complain, but they can't stop the Panama Canal Authority from raising rates. Hey, somebody's got to pay for that new subway system. And that new hospital. And that new prison. And that new bridge. And that new road. And that new school. And all of the other stuff the Martinelli administration is building fo' da' people.

The ACP Board of Directors last month approved a proposal amending certain market segments of the Panama Canal and established from 1 July, an increase to the segments of general cargo, containers / breakbulk, bulk dry tankers, chemical tankers, car carriers, ro-ro, and others. The remaining segments will not have adjustments at this time. For smaller vessels, they proposed four price levels on the basis of the length of the boat.

New segments - The proposal increases from eight to eleven segments by type of vessels of the Panama Canal. For the existing (container, refrigerated cargo, dry bulk carriers, passenger, car carriers, tankers, general cargo and other), it eliminates the tanker segment, and adds the oil tankers, chemical tankers and container ships / loose cargo. Also, the vehicle carriers are incorporated hereinafter as ships types roll on / roll off (roro) being called car carriers / roro.

As a next step, the ACP Board of Directors will review the feedback from customers and users before making a decision on the proposed amendment of tolls which will then be sent to the Cabinet Council for final approval. (Critica)

A Cruise Ship In The Panama Canal

According to Jaime Castillo, Office of Research and Market Analysis of the Panama Canal, between October 1, 2011, when the season started, until 17 May, there were 200 transits with a total of 222,203 cruise passengers board. According to Castillo, the routes of these vessels are usually of short duration, covering the Caribbean islands and the east and west coasts of Central America.

This season saw the first transit of the Panama waterway Norwegian Jewel cruise ship operated by Norwegian Cruise Line, on 5 May. This ship, with capacity for 2,376 passengers, sailed from New York in late April bound for Los Angeles, California (USA). (Panama America)