International Maritime
Starting May 15 , the Panama Canal ( pictured ) will allow 31 ship transits per day , up from 24 currently . Shutterstock . com
Container shipping has been largely unscathed by the transit restrictions , which have mostly hit other ocean trades such as tankers and bulk carriers , forcing them to pay higher tolls for the remaining transit slots . Both Maersk and Hapag-Lloyd have restored canal services as transit restrictions have lessened .
Nevertheless , the container shipping industry needs to plan around the risk that transit restrictions could impact operations in the future , Stuart Sandlin , Hapag-Lloyd ’ s North American president , said April 22 at the Georgia International Trade Conference .
“ We really need the Panama Canal Authority to invest in themselves , if they are going to make a statement as a gateway .”
“ When [ the ACP ] continues to cut transits , it ’ s really difficult ,” Sandlin told the audience at Sea Island . “ And I think that that ’ s the problem . I don ’ t want to get into a place where it ’ s a bidding cycle to get to the front of the line and I have to bid for the next transit .
“ The Panama Canal is one of the challenges that is going to continue to play out for the long term ,” he added .
Long-needed investment
The ACP said in February it would need to invest $ 2 billion over the next six years in managing Gatun ’ s water levels to avoid transit restrictions . The ACP ’ s plan , which it identified back in 2003 , involves building a pipeline from the Rio Indio reservoir to pump additional fresh water into Gatun .
However , the project requires the approval of Panama ’ s legislature , which barred the ACP from building or managing more reservoirs following the construction of a third set of locks on the canal . So far , the legislature has not taken up the ACP ’ s plan , which is opposed by Panamanian farmers . Sandlin said that if the Rio Indio had been approved earlier , it could have mitigated the transit restrictions .
“ If they had done that work a little while ago , it would have cost much less and they would have already solved the problems in terms of the piping and the reservoirs ,” he said .
Mario Giannobile , vice president of Maersk , said at the Georgia conference the carrier is the biggest user of the Panama Canal . He added that “ we really need the Panama Canal Authority to invest in themselves , if they are going to make a statement as a gateway .”
Among other workarounds , Mexico ’ s President Andrés Manuel López Obrador proposed restarting a $ 3 billion project to build a railroad that would move containers across the country ’ s 1,000-mile-wide southern isthmus . Intermodal service from the Port of Lazaro Cardenas into North America has also been used as an alternative to the Panama Canal . But Hapag-Lloyd ’ s Sandlin said , “ there ’ s a lot of reluctance ” to use rail as an alternative .
The Panama Canal ’ s transit capacity will be all the more in focus as ocean carriers continue to divert away from the Suez Canal due to ongoing attacks on commercial shipping in the Red Sea . Sandlin said that the timeline for a return to Suez transits keeps getting pushed further out , particularly as the overall tensions in the Middle East show no sign of abating .
“ When we look at the Red Sea challenges , I can tell you that we had aspirations that hopefully in the second half of the year , we were going to be able to return to normalcy ,” he said . “ We don ’ t really see that right now . It ’ s very possible that it ’ s not until fourth quarter or next year before we start seeing some kind of normalcy .”
email : michael . angell @ spglobal . com
18 Journal of Commerce | May 6 , 2024 www . joc . com