Shippers Spend $235 Million to Bypass Panama Canal Jam
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Shipping companies have paid a total of $235 million so far this year to jump ahead of a backlog of congestion at the Panama Canal, according to data from shipping agency Waypoint Port Services Ltd. That’s 20% higher than the fees paid for all of last year.
Faced with severe drought caused by El Niño, the Panama Canal Authority plans to reduce access through February 2024 to conserve water for the country, further driving up competition for shippers desperate to speed through the waterway. Transport companies have already been paying record-high fees to jump the queue, with fees to expedite passage paid via auction held by the canal agency.
The auction fees already generated this year are enough to cover a projected revenue shortfall of $200 million that the canal would lose from reduced slots, based on estimates by financial services firm ING Groep NV. Auction fees are paid on top of usual tolls to cross the canal.
Auctions provided options to customers who would otherwise not have reservations and prices were determined by market dynamics, said a Panama Canal spokesperson, who added that it’s too early to predict the impact of auctions on revenues.
“With the amount of money being paid in the auctions and the amount of money that customers are willing to put in, we really don’t know where this is going to end,” said Francisco Torné, Panama country manager for Waypoint.
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