The International Chamber of Shipping (ICS) – with the direct support of International Association of Dry Cargo Shipowners (Intercargo), and the International Association of Independent Tanker Owners (Intertanko) – has submitted formal comments to the Panama Canal Authority (ACP), expressing serious concerns about the major toll increases proposed in connection with the planned expansion of the Panama Canal.
The three associations embody the voice of the international shipping industry, and major Middle Eastern players are represented within the groups. Abu Dhabi National Tanker Company (Adnatco) is an associate member of ICS, and Dubai based heavyweights Emarat Maritime is an Intercargo member, and Gulf Energy Maritime (GEM) is an Intertanko member.
A public hearing is due in Panama on March 14
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where the ICS secretary general, Tony Mason, will represent the industry. “ICS members have cautiously accepted the concept of sectoral pricing, and the introduction of charges per berth for larger passenger vessels. However, we are very disappointed that our repeated request that increases in tolls should be equitable, transparent and spaced over a sufficient amount of time appear, by and large, to have been ignored,” explained Mason.
The global shipping industry is firmly opposed to the quantum of the proposed toll increases. “The official expansion proposals referred to projected increases in tolls of 3.5% per annum over a twenty year period,” said Mason. “However, the actual proposals would lead to increases ranging from 26% to 34% over the first three years (equal to 8% to 10% per annum) with increases for container carrying vessels and larger passenger ships considerably in excess of 10% per annum,” he added.
ICS has argued that in any other industry, changes of this magnitude over such a short period of time would be regarded as being unacceptably large. ICS members believe the proposed toll increases have too short an initial notice period and are spread over too short a time period for adequate long term planning or for effective absorption of additional costs.
“In particular, the three months notice for some sectors will cause significant problems. Six months notice of the initial increases, and phasing in the increases over, say, six rather than three years, would be far more reasonable,” said Mason.
ICS also argues that the PCA’s proposals do not appear to represent a fair distribution of costs between current and future users. “Canal users feel that increases in Canal dues should be matched by a tangible improvement in the service provided, and that they should not be expected to provide up-front financing for a major infrastructure project from which they may not individually derive any benefit,” explained Mason.
ICS members have suggested that the canal authority explores further the extent to which external financing can be used to spread the costs over a larger period of time. To avoid undermining industry confidence, and given previous ACP statements about the intention to double tolls over the next twenty years (which would equate to 3.5% per annum). The groups represented by the ICS are seeking a commitment that the overall result of present and future increases will not exceed the expected annual average of 3.5%.
The 92-year-old Panama Canal is planning to double its capacity following an overwhelming ‘yes’ vote in a public referendum in October last year. US$2.3 billion towards the overall cost will be raised through secured loans, but the remainder of the project is to be funded by increased toll revenues. Initial work is scheduled to begin in 2008.
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