Panama Canal sees slow revenue growth as sea trade lags

After weathering the financial and economic crisis that crippled global trade, the Panama Canal expects to see a modest rise in revenue this year as the recovery takes time to filter through to the shipping industry, Dow Jones reported.

"This year will be flat, it will be very similar in terms of volume," Alberto Aleman, the chief executive of the Panama Canal Authority said. "We are seeing the same tonnage."

The Canal's revenues fell to US$1.96 billion in the fiscal year 2009 – which ran from October 2008 to September 2009 – down from $2.01 billion in 2008. The forecast for this year is $2.02 billion, Aleman said.

The canal's net profit will probably fall to around $960 million from $1.01 billion in 2009 and $1.03 billion in 2008.

Despite the world economy's recovery, the canal's business will take time to pick up, Aleman said. The shipping industry always lags the rest of the economy as orders take several weeks to reach ports, and it takes companies time to get enough confidence to increase inventories, Aleman said.

Although the global crisis caused a sharp drop in overall trade, the Panama Canal suffered only modestly. About the same number of ships moved through the waterway in 2009 as in 2008, but tonnage fell three percent.

Transportation of bulk loads has already improved, while shipping of containers and vehicles is still low, Aleman said.

Canal revenue last year was affected by rebates the canal gave to its customers, included considering as empty container ships that were less than 30 percent full.

The rebate is scheduled to end in May, when a new fee structure is expected to be announced following discussions between the Canal Authority and industry players.

About five percent of all the world's seaborne goods pass through the Panama Canal, which joins the Atlantic and Pacific oceans.

The canal is expanding its capacity to allow more and wider ships to cross the Central American isthmus. The project includes the construction of two new sets of locks and two new short stretches of canal parallel to the existing one.

The expansion was initially estimated to cost $5.25 billion, but it's now likely to be about $380 million less than that because of competitive bids by private contractors, Aleman said.

Just over $1 billion of the investment is earmarked for unforeseen events, so it's likely at least a portion of this figure won't be spent.

The official said the expansion will be ready in 2014, as scheduled.

(Source: Cargo News Asia)