Dive Brief:

• Ocean carriers are calling on the Panama Canal Authority (PCA) to delay a change to its toll structure taking effect on Jan. 1, 2020, the same day as the International Maritime Organization's (IMO) new sulfur regulations, according to a press release from the International Chamber of Shipping (ICS), the Asian Shipowners’ Association (ASA) and the European Community Shipowners’ Associations (ECSA).
• The carriers are asking for the toll changes to be delayed until June 2020, saying it would allow them "to adequately plan and adjust their commercial activities accordingly," the release reads.
• Pushing the new toll structure back would allow carriers "to avoid the ‘double whammy’ that the industry would face" with IMO and the toll changes going into place at the same time, Helio Vicente, the senior policy adviser at ICS, told Supply Chain Dive in an email. ICS has not received any indication the start date for the toll changes will be pushed back, Vicente said.

Dive Insight:

Multiple freight segments would see increased tolls as a result of the changes, including dry bulk carriers, tankers, liquefied natural gas (LNG) vessels and passenger vessels, according to an analysis by ICS emailed to Supply Chain Dive and a copy of the plan published by PCA. The canal says these updates will help to "reach a profitability level in accordance with the risk levels, investment amounts and the value added by the Canal to its users," according to the PCA's published rationale.

The new structure also includes changes to the PCA's loyalty program for container ships to encourage greater TEU capacity and more full container vessels. The program results in a tariff reduction if a certain volume threshold is met.

But even with the potential savings from the loyalty program, ICS worries other toll hikes could be too much to handle if they were to happen simultaneously with IMO 2020. The new toll structure would result in increases including an 8% toll increase for laden and ballast LNG ships and a 10% increase for vehicle carriers using the Neopanamax locks, according to ICS.

Carriers are also expecting a significant financial hit from IMO 2020 regulations, which set a much stricter limit for ship sulfur emissions. Compliance will cost millions of dollars for carriers who will need to either outfit ships with scrubbers or begin purchasing low-sulfur fuel.

The PCA announced the new toll structure last month when Panama Canal Administrator Jorge Quijano said "Our proposed modifications will increase transparency and flexibility, among other improvements, to ensure the Panama Canal remains competitive and optimal for the industry today and moving forward," in a statement.

The public was given the chance to voice their opinion on the plan earlier this month at a public comment hearing. 

The toll change still needs to be approved by the Panama Canal Board of Directors which will then send it to the Cabinet Council of the Republic of Panama for the final decision, a PCA spokesperson told Supply Chain Dive.