Additional vessel fee assessments from Vessel Carrier’s using the Panama Canal to increase.
The Panama Canal Authority (PCA) on June 7, 2023, announced they have implemented restrictions on cargo vessels transiting the canal and advised further restrictions could come if the water levels continue to recede as the region is currently facing a severe drought.
The PCA has implemented vessel draft restrictions, which means the authority directs cargo vessels as to how deep the vessel bottom can sit in the water. The new draft restrictions, direct vessels to carry less weight, effectively meaning a vessel will need to reduce the number of containers on board to be permitted the transit through the canal. Some reports indicate that as much as a 40% reduction in containers is required to transit the canal.
The current restrictions as of this week are limited to Neo-Panamax* vessels and not Panamax* vessels, as their vessel draft requirements remain unchanged, however further reductions in the maximum draft depth could be implemented if the water level continues to drop.
Should conditions continue to worsen, the Canal Authority is considering extreme measures that may include limiting the number of daily crossings. Currently, 35 ships cross the canal per day, however, that number could well drop to 28-32 crossing. Such an action, if implemented, could cause a backlog of vessels and would create supply chain delays.
At least four ocean carriers have declared limits or imposed additional container fees ranging from $300-$500 per box, effective June 1, 2023. The carriers are passing on these fees as their profit margin decrease and are adding a “draft fee” in response to the measures adopted by the Canal Authority’s draught action, as it relates to the imposed draft restriction. Additional carriers are likely to impose similar increased fees.
If you have any questions, feel free to contact your Western Overseas representative.
*Note: Neo-Panamax vessel refers to ships designed to fit exactly in the locks of the expanded Panama Canal (which opened in June 2016). Panamax vessel refers to ships designed to fit the smaller/original locks and carry lesser loads than a Neo-Panamax vessel.