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Panama Canal Authority Holds Public Hearing on Proposed Changes in Measuring and Pricing Full Container Ships and Vessels with On-Deck Container Carrying Capacity

Date: 07-JAN-2005

ACP WELCOMED COMMENTS AND FEEDBACK FROM CUSTOMERS,
SHIPPING GROUPS AND OTHER REPRESENTATIVES

PANAMA CITY, Panama, January 7, 2005 – Welcoming comments and feedback from several representatives, the Panama Canal Authority (ACP) today conducted a public hearing on its proposal to change how it measures and prices full container vessels and other vessel types with on-deck container carrying capacity. Fifteen representatives from the shipping industry, government delegations from countries that use the Canal, and Panamanian stakeholders participated in the hearing. Among the participants were the World Shipping Council (WSC) and the International Chamber of Shipping (ICS), and the governments of Ecuador, Peru, Chile and South Korea. This event marks the close of the official consultation period that began on December 7, 2004.

During the consultation period and public hearing, the ACP was commended for taking a positive step toward a more market-based system of measuring and pricing by ship type. The ACP was also praised for the investments and improvements it has undertaken to increase Canal capacity and continue to provide an efficient, safe and reliable service to its customers.

Throughout the official consultation period, the proposal was made available to all interested parties. The ACP received feedback from individuals and groups in the form of data, opinions and written statements in both English and Spanish. A total of 31 feedback submissions were received by the ACP.

Prior to the announcement of the proposal last December, informal consultations were conducted for nine months by the ACP with its customers and the maritime industry, including the WSC and the ICS. The ACP made every effort to incorporate their inputs into the new proposal.

The reason for changing the measurement and pricing system, including the move to use the Twenty-Foot Equivalent Unit (TEU) instead of the Panama Canal Universal Measurement System (PC/UMS) tonnage for full container vessels, is to bring the current system on par with international standards held by the container industry and to enable the ACP to receive a fair value for its services. This will also provide a more accurate measurement and offer increased transparency to Canal users and their customers.

On November 23, 2004, the ACP’s Board of Directors gave ACP management authorization to proceed with the formal proposal. If approved, the new system will be phased in over the next three years, beginning in the second quarter of 2005.

The main elements of the new measurement and pricing proposal are the following:

  • For full container vessels: The new system will reflect international standards for measuring a container – the TEU, which is 20’x 8’x 8.5’ in size. Full container vessels will be charged based on the total number of TEUs the vessel can carry fully loaded (their capacity), replacing the current PC/UMS tonnage.

    Currently, the ACP calculates tolls based on PC/UMS net tonnage and, in general, includes: all enclosed spaces in the vessel, such as the hull; spaces reserved for generating capacity to run refrigerated containers; other spaces that include special stability equipment, which keeps the vessel level during high-speed container operations; storerooms and other areas that improve the earning capacity of the vessel; and spaces that are used to directly support the cargo carrying capacity of the ship.

    The change in the charge unit, from PC/UMS net tonnage to the total TEU carrying capacity of the vessel, required the ACP to adjust the TEU charge to reflect the enclosed spaces that support the earning capacity of the vessel, which were part of the PC/UMS formula. This resulted in an increase from the initial $40 per TEU that the ACP had previously proposed to charge for on-deck container capacity, to the $54 per TEU that is in the formal proposal for container carrying capacity of the entire vessel.

    The new system will take into account the visibility limitation imposed by the Panama Canal that limits the height of containers that may be stacked on a ship’s deck.
  • Other vessels with on-deck container carrying capacity: Vessels other than full container ships that have on-deck container carrying capacity will continue to use PC/UMS tonnage to measure enclosed spaces and spaces below deck. The transit charge of these vessels will be based upon the ship’s current PC/UMS volume charge plus a charge for each TEU transported on-deck.

The proposed pricing plan will be implemented as follows:

PRICE/TEU
IMPLEMENTATION DATE
$42
May 1, 2005
$49
January 1, 2006
$54
January 1, 2007

If the changes to the pricing system are adopted, by January 1, 2007, the difference between the current average price per container transiting the Canal and the proposed price of $54 will only be $20. It is considered that this increase will not have a significant impact on the cost of any product that is transported in containers.

The ACP’s Board of Directors will review the comments received during the official consultation period and will be submitting its recommendation to the Cabinet Council of the Republic of Panama for approval in the next few weeks.

For more information or to obtain an electronic copy of the original proposal, please visit: www.pancanal.com.

About the Panama Canal Authority
The Panama Canal Authority is the autonomous agency of the Government of Panama in charge of managing, operating, and maintaining the Panama Canal. The operation of the Panama Canal Authority is based on its organic law and the regulations approved by its Board of Directors. For more information, please refer to the Panama Canal Authority’s Web site: www.pancanal.com.

The Authority’s responsibility to the Panamanian people is paramount. The Canal belongs to the people and benefits from the Canal should accrue to as many Panamanians as possible. The Authority will plan its future so that it will continually contribute to the economic development and welfare of the citizens of Panama.


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