A new freshwater charge that was applied this month in order to help the Panama Canal address climate change, will eventually cost the shipping industry up to $370 million a year. This fact marks another hit for the industry, after the coronavirus blow.
The Panama Canal introduced a charge on February 15, of $10,000 for any vessel more than 125 feet long. As Reuters reports, the canal has been hit by drought which affects water levels in the chokepoint.
For this reason, the Panama Canal authority added that it would bring in a variable surcharge, based on the level of Gatun Lake to make sure the canal has enough water.
According to the authority, the charges were a result of a lack of rainfall, and they are a short-term measure to cope with the impact of climate change.
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Commenting on this charge, the International Chamber of Shipping (ICS) alerted that this move will increase costs to ships by up to 15%. ICS informs that vessels transmitting through the Canal may deal with price hikes of over 30% by April 1st.
Thus, the Chamber comments that the announcement of the new charge and the date of the implementation have a month remainder, giving little time to consider the decision and its potential effects.
Guy Platten, Secretary General ICS commented that:
While we have worked with the Panama Canal Authority to manage the upcoming implementation of toll modification rise on April 1st, the introduction of the ‘Freshwater Charges’ have taken the shipping industry by surprise
He added that the industry is already dealing with a number of challenges, from the coronavirus to the new strict environmental regulations, meaning that the charge is another barrier.
Mr Platten noted that “Shipping already operates on the slimmest of margins. Cost hikes in this range, without sufficient warning, places undue pressure on the industry at a sensitive time when we are being asked to invest in a low emissions future.”
