International shipping lines are asking the Panama Canal Authority to either cancel or defer the toll rate increase, due to take effect this year. The request comes as some of the worlds largest shipping lines are avoiding the Suez Canal transit fees by diverting around the Cape of Good Hope. Panama could be in trouble if shipping companies choose to do the same with the Republic’s beloved canal.

A number of shipping companies have already written to Panama Canal authorities warning there are now “serious concerns about the industry’s ability to sustain a further toll increase”. The letter was written to Alberto Aleman Zubieta, Canal Authority administrator, and also says the economic landscape has changed drastically since the toll increase was announced 2 years ago.

The issue is discussed in depth on Lloyd’s List, a maritime and transport news portal.

The round table of shippers and shipping organizations also pointed out that the economic crisis has had such a severe effect on shipping companies, that some many not be able to remain in business. In response the the financial crisis, the Suez Canal has announced an indefinite freeze on transit fees.

Ships that are now avoiding the Suez Canal, are saving an average of $600,000 on transit fees, in favour of the one-week extra it takes to go around the Cape of Good Hope. The Panama Canal is in the midst of a $5.2-billion dollar (at least) expansion, which will be funded in part by canal toll increases.

News of ships avoiding the Suez Canal and pleas to the Panama Canal Authority not to increase tolls comes on the heels of news that there have been less orders for post-Panamax ships in recent months. One purpose of the canal expansion is to accommodate post-Panamax ships.

Skeptics have been saying that Panama will not be effected as severely by the global economic crisis, but if this news is anything to go buy, this is just the begining of Panama’s financial woes.

This post's rating:

Related Stories

Filed under: Business, News on January 29th, 2009