Two Major Shipping Giants Announce Panama Canal Surcharge in Response to Worsening Conditions

Source: 5688.cn

In the face of escalating challenges posed by the ongoing drought affecting the Panama Canal, leading maritime companies, Mediterranean Shipping Company (MSC) and CMA CGM Group (CMA CGM), have recently declared the implementation of a Panama Canal surcharge. The current conditions, characterized by tightened vessel transit restrictions and a continuous decline in daily canal traffic, coupled with an earlier hike in canal tolls, have significantly elevated operational costs for shipping companies.

MSC's Surcharge Details:

To address the increasingly severe capacity reductions in the Panama Canal, MSC has outlined a surcharge of $297 per twenty-foot equivalent unit (TEU) for goods passing through the canal. This surcharge is set to be effective from December 15, 2023. MSC emphasized that despite the Panama Canal Authority (ACP) implementing water conservation measures in recent months, the persistent lack of rainfall has led to further constraints on vessel passage through the canal. MSC highlighted the direct impact of these restrictions and the earlier toll increases on the overall operational costs.

CMA CGM's Announcement:

Prior to this, CMA CGM had already announced new standards for the Panama Canal surcharge. In a customer notification, CMA CGM mentioned that the canal's transit restrictions have severely affected operations. Therefore, starting from January 1, 2024, a new Panama Adjustment Factor of $150 per TEU will be applied.

The ACP has consistently communicated that the Panama Canal is facing the "most severe drought since records began in 1950." In response to the prolonged water scarcity, the ACP continues to reduce the daily number of transiting vessels while maintaining a lower draft for ships. These measures are anticipated to persist until the end of September 2024.

The phased reduction in vessel transit is as follows:

- From November 3, the daily vessel count is reduced to 25.

- From November 7, the count is further reduced to 24.

- From December 1, the count decreases to 22.

- Starting January 1, 2024, the count will be further reduced to 20.

- From February 1, 2024, the count will be lowered to 18.

It is important to note that the normal draft for the Panama Canal is 15.24 meters, and the reduction in draft will result in a roughly 40% decrease in the cargo capacity of large container ships.

Official data indicates that the Panama Canal operates 24/7 throughout the year, facilitating the passage of 13,000 to 14,000 vessels annually. The ACP's adjustment measures are expected to increase global shipping costs and cause prolonged transportation delays.

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