Brazilian port operators, including units of Cargill and Bunge, will present a proposal to reduce Panama Canal tariffs and limit their costs in shipping agricultural commodities to their main market in China.
The port operators argue that with the current tariffs, shipping grains from Brazil’s northern ports through the Cape of Good Hope is almost $206,000 cheaper on a per-ship basis than using the Canal.
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Namely, according to Reuters, a study will be presented on April 4, with the port operators association ATP proposing to use the idle capacity of the old Panama Canal rather than the congested large new locks which opened in 2016 for Panamax ships.
This could have the ability to cut shipping costs and make journey times less by 4-5 days between Brazil and the Chinese and other Asian markets, according to ATP. Under this aspect, the operators aspire that this proposal will open the way for talks between Brazil and Panama to reduce tariffs.
This proposal will have to be made by the Brazil’s agriculture ministry to the country’s foreign affairs ministry, which will have the responsibility for negotiating the terms with Panama. However, the ministries have not commented on this yet.
This proposal is considered as a new step towards developing new trading routes for Brazil. A first step was made in that direction during March 2018. Then, Aprosoja, an association of grain growers in Mato Grosso state, inked a cooperation agreement with the Panama Canal Authority.
