October 4, 2023

Panama canal operations were a hot topic in the ’70s too


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FreightWaves explores the archives of American Shipper’s nearly 70-year-old collection of shipping and maritime publications to showcase interesting freight stories of long ago.

In this week’s edition, from the March 1978 issue, FreightWaves examines earlier discussions on how to make Panama Canal operations as efficient as possible, even as the canal struggles today with low water levels.

Primary concern is that Panama Canal operate efficiently

Although it was billed as a forum for sharp criticism by the American shipping industry of the proposed Panama Canal treaties, Ambassador Ellsworth Bunker’s presentation for the treaty before the Washington, D.C., Propeller Club and the reaction to the Ambassador, seemed to indicate the shipping industry does not really have a strong position for or against the Canal treaties.

Shipowners around the world are concerned, however, that the treaty provision increasing U.S. payments to Panama for use of property in the Canal Zone will mean increased tolls.

“Our primary concern is that the Canal will continue to be operated efficiently,” said Farrell Lines’ President Thomas J. Smith after the Ambassador’s speech. “Naturally, we are not in favor of increased tolls, but we also hope that some of the problems we’ve had in transiting our ships through the Canal will be dealt with.”

Apparently, because of the large size of barge-carrying LASH vessels, these ships have been forced to wait substantial periods of time before being permitted to transit the Canal.

Ambassador Bunker told the Propeller Club that U.S. negotiators had been fully posted on the impact of toll increases on Canal traffic and on alternative routings — in particular, on minibridge and other landbridge routes.

“As long as the Canal is run efficiently, and it does not appear to us that the treaty would affect this, then we have no objection to the treaty,” said British Petroleum Tanker Company Managing Director George King.

According to Ambassador Bunker, the anticipated toll increase of 30-35% which would result from the increased payments to Panama, should add about a half cent to the transportation cost of a bushel of wheat exported from Iowa to Japan (the total transportation cost of which is now at 66 cents), about 15 to 20 cents per ton of coal exported to Japan, about a tenth of a cent per gallon of Alaskan oil shipped through the Canal to the East Coast, and about $3 to the cost of shipping a Japanese car to the East Coast.

“A toll increase of about 30-35% would involve a delivered cost increase of less than 0.1%,” said the Ambassador. “Users of the Canal would pay only about $50 million more in tolls per year on cargos that have a value in excess of roughly $50 billion; that is, one-tenth of one percent. …”

The Ambassador said the Carter Administration does not contemplate raising any of the additional payments to Panama through federal appropriations, that is, through federal tax income.

“I believe that the real choice before us is not between the Treaty of 1903 and the ones signed on September 7, 1977, but rather between the new treaties and what will happen if they are rejected,” said Bunker. “If we attempt to continue the status quo, we invite prolonged confrontation; if we choose partnership, we can look forward to a safe, open, efficient and neutral canal.”

Many shipowners believe that the Panamanian government will have a moderating influence when proposals for toll hikes are made since the Canal is Panama’s chief asset.

FreightWaves Classics articles look at various aspects of the transportation industry’s history. Click here to subscribe to our newsletter!

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The second annual F3: Future of Freight Festival will be held in Chattanooga, “The Scenic City,” this November. F3 combines innovation and entertainment — featuring live demos, industry experts discussing freight market trends for 2024, afternoon networking events, and Grammy Award-winning musicians performing in the evenings amidst the cool Appalachian fall weather.

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