Shipping Companies Pay Record-High Fees Amid Panama Canal’s Reduced Capacity

Shipping companies are reportedly paying record-high fees for expedited passage through the Panama Canal.

So far this year, these companies have paid a total of $235 million, Bloomberg reported Wednesday (Nov. 22).

The figure is 20% higher than the amount shipping companies paid in all of 2022, the report said, citing figures from shipping agency Waypoint Port Services.

They are doing so to go through the congested waterway more quickly at a time when drought has reduced the canal’s capacity for traffic, according to the report.

The fees for expedited passage are paid in addition to the canal’s usual tolls, the report said. The price is determined in auctions run by the Panama Canal Authority.

The extra fees will cover a projected $200 million revenue shortfall that the canal will suffer this year due to the reduced traffic, the report said, citing figures from financial services firm ING Groep NV.

The Panama Canal Authority expects to continue limiting the amount of traffic through February 2024, per the report.

The canal has faced these challenges because of a prolonged dry season that has seen its supply of fresh water for operating the waterway drop to the lowest level ever recorded during a rainy season in the reservoir’s history, the Panama Canal Authority said in an Oct. 3 press release.

“In response to the rising water demand and fluctuating rainfall patterns, the canal has implemented operational and commercial adjustments to guarantee a fresh water supply for both human consumption and for transits during the next dry season, which runs from December 2023 to April 2024,” the organization said in the release.

The reduced shipping capacity through the Panama Canal comes at a time when shipping companies are facing other challenges as well.

Shipping companies are coping with reduced volumes, lower freight rates and higher costs, creating a “new normal” for the industry, Vincent Clerc, CEO of shipping company Maersk, said Nov. 3.

“Since the summer, we have seen overcapacity across most regions triggering price drops and no noticeable uptick in ship recycling or idling,” Clerc said while announcing that the firm is eliminating another 3,500 positions on top of the 6,500 it has cut throughout the year.

For all PYMNTS B2B coverage, subscribe to the daily B2B Newsletter.

The post Shipping Companies Pay Record-High Fees Amid Panama Canal’s Reduced Capacity first appeared on PYMNTS.com.