Singapore Shipping Association slams Panama Canal fees
There are concerns that a plan by the Panama Canal Authority to hike fees will reduce shipping lines' profits, with SS Teo, president of the Singapore Shipping Association (SSA), warning it will have "negative and unacceptable consequences on the world economy".
The SSA represents 289 companies registered in the city-state. "Such an increase will only exacerbate the current economic pressure which the shipping industry is currently facing," said Mr Teo, who is also managing director of Pacific International Lines (PIL).
Mr Teo told Bloomberg he believes the canal authority's proposal to increase charges by up to 47 per cent over three years to finance the expansion of the waterway to accommodate larger vessels is unacceptable given prevailing low rates and overcapacity in the market. The 92-year-old waterway currently handles about five per cent of world trade.
"There are still concerns about overcapacity in the market and that could limit how much shipping lines can pass on these costs to customers," said Kim Eng Securities analyst Rohan Suppiah, of Singapore.
Panama plans to invest US$5.3 billion to double the handling capacity of the canal by 2014. Vessels with a carrying capacity of 4,500-TEU vessels are said to pay around $300,000 to use the canal at present.
