As the widening of the Panama Canal nears completion, the canal authority has proposed new tolls that are intended to encourage the transit of liquefied natural gas (LNG) cargoes through the passage.
"The new structure will apply to the existing canal as well as the new lane of traffic when the expansion project begins operation in 2016," the Panama Canal Authority said. "The new locks will allow shipping lines to transit the canal with larger ships, providing greater economies of scale. Moreover, the expansion will open new global shipping routes and allow the transit of non-traditional commodities through the waterway, such as liquefied natural gas (LNG).
Wood Mackenzie’s Andrew Buckland, principal analyst for LNG shipping, said the tolls as proposed are right about where the consultancy expected them to be. “The rates were actually pretty much exactly as we expected them to be. Elsewhere in the LNG industry there had been fears that they'd be set a lot higher,” he told NGI.
LNG represents a new line of trade for the canal as it currently is not wide enough to accommodate LNG tankers. Tolls for LNG tankers will be based on their capacity in cubic meters, which the authority said "...will ease the calculations of tolls for new customers to the Panama Canal. The new toll structure will also provide an incentive for the new LNG segment, where customers that use the same vessel for a roundtrip voyage through the Canal will have the option of receiving a special ballast fee, if the transit in ballast is made within sixty days after the laden transit was completed."
The toll proposal for LNG contemplates the use of four bands that includes the first 60,000 cubic meters of cargo capacity, the next 30,000 cubic meters of capacity, the next 30,000 cubic meters of capacity and a last band for the remaining cargo capacity. The toll would be highest for the first band and decrease with subsequent bands.
The laden toll for the first band would be $2.50 per cubic meter and would decrease to $2.15 for the next band, $2.07 for the next band and $1.96 for the last band of remaining capacity. Ballast tolls would be $2.23, $1.88, $1.80 and $1.71, respectively.
"In addition, shippers that use the same vessel for a voyage to and return from a specific place through the Panama Canal will pay the laden tariff for the laden portion of the trip and would be eligible for a roundtrip ballast fee if the return transit in ballast through the Panama Canal is made within 60 days after the laden transit was completed," according to the proposal.
By capacity band, the roundtrip ballast tolls would be $2.00, $1.75, $1.60 and $1.50, respectively.
For instance, a laden LNG tanker with 173,000 cubic meters of capacity would pay $380,480 to transit the canal. The same tanker would be subject to a ballast toll of $334,830. And that same tanker qualifying for round trip ballast toll treatment would pay the same laden toll of $380,480 but would pay $300,000 for the return transit.
Buckland said that some watching what the canal authority would do had expected the tolls to be set so high as to take up virtually all of the cost savings realized from transiting the canal on the way to Japan as opposed to sailing around the Cape of Good Hope. However, tolls this high would have limited the markets attractive to shipping via the canal. While higher tolls on the way to Japan might have worked, they would have shut out shipments of greater distances, to China for example, as the economics would not have worked, he said. "If they set the rate too high, they just restrict the geographical location where U.S. Gulf exports would actually use the Panama Canal," Buckland said.
The proposal for the new toll structure follows more than a year of consultations with representatives of various industry segments, the authority said. Comments on the proposal are invited and will be accepted in writing by Feb. 9. A public hearing is scheduled for Feb. 27. Those interested in participating in the hearing must give notice in writing of their intention by Feb. 9.
"The proposal, in its current form, safeguards the competitiveness of the waterway, charges a fair price for the value of the route and facilitates the canal's goal of providing impeccable service to the global shipping and maritime community,” said authority CEO Jorge Luis Quijano.
New tolls are scheduled to take effect in April 2016.
LNG is a new toll category. The last canal tolls modification was put into effect in 2012-2013 for dry bulk vessels, tankers, chemical carriers, gas carriers, vehicle carrier/roll-on/roll-off, general cargo and other vessel types segments. Container, reefer and passenger tolls have remained unchanged since 2011.