How to handle the Panama Canal’s basket of new surcharge adjustments

Inchcape Shipping Services’ John Willemsen, Area General Manager – Central America, and Marine Service Manager Fernando Ayala outline the latest Panama Canal surcharges that came into effect from 1 January, how they work and how to manage the potential complexity and mitigate cost risk.

The Panama Canal is a vital shipping route connecting the Pacific and Atlantic oceans that serves as a conduit for about 5% of global trade annually. Navigating the Canal’s complex toll system and regulations while avoiding delays is the biggest challenge for ships making the passage. Today the biggest issue is the unpredictability of waiting times for non-prebooked ships, which in some cases can be as long as two weeks and can seriously impact cargo schedules and voyage costs. This is especially the case during the dry season when there are fewer canal transits overall. Generally, there are fewer first-come, first-served slots available as the Canal looks to maximize auctions, including cancelled slots going directly into the auction system.

On top of the new rules introduced in 2019, the administration recently announced further adjustment of surcharges that came into force on 1 January. These comprise:

Part one – surcharges related to transit reservations

Change in transit reservation date This applies to requested changes in reservation date due to vessels, for example, not arriving in time, where the slot awarded will be immediately replaced with another booking. Charges only apply for change requests made more than 60 days in advance of the booking. These are: 60% of the reservation if the request is made more than 21 days to 60 days prior; 70% of same if the request is made 7 to 21 days prior; and 80% of same if the request comes 4 to 7 days prior.

Note that vessels that cancel a booking but do not provide a replacement date or there is no slot availability on the new date requested are now subject to the following charges (whichever is greater): 10% of the booking fee or USD 500 if the notice period is over 365 days; 20% of the booking fee or USD 600 if the notice period is 180 to 365 days; 50% of the booking fee or USD 900 if the notice period is 90 to 180 days; 60% of the booking fee or USD 1,100 if the notice period is 21 to 90 days; 70% of the booking fee or USD 1,300 if the notice period is 7 to 21 days; 80% of the booking fee or USD 1,600 if the notice period is 4 to 7 days; and 100% of the booking if notice is given up to 96 hours prior to the booking.

Change (swap) of booking slots between two booked vessels
The first requested switch of vessels remains free of charge, however charges for further switch requests will be based on a percentage of the booking fee instead of a fixed amount.

Substitution of a booked vessel with another non-booked vessel
Operators substituting a booked vessel with another non-booked ship will only have to pay an administrative charge of USD 500 if the substitution is requested more than 21 days in advance of the reservation date. Otherwise, the charges are now: 20% of the reservation for substitutions made 14 to 21 days prior; 40% of the reservation for substitutions made 7 to 14 days prior; 60% of the reservation for substitutions made 4 to 7 days prior; and 80% of the reservation if notice is given up to 4 days prior.

In addition, if a non-booked vessel enters an auction, wins the bid but then cancels the transit for whatever reason, the operator is now charged 100% of the winning bid as the cancellation charge for the awarded auction slot, versus 90% before.

Days of High Demand
This new regulation applies to Neopanamax vessels and Panamax-plus vessels only,where the Canal will announce in advance premium transit days based on a review of traffic behavior statistics every six months. From 1 January and for the next six months the day of high demand will be Friday. On these days there will be surcharge to the booking fee of 10%, both for prebooked reservations and bookings acquired at auction. Note that vessels that have booked for a day that is later nominated by the Canal as ‘high demand’ will not have to pay the surcharge. Please contact us for details of the other rules that apply.

Just-in-time (JIT) applications
All JIT transit applications are subject to ACP evaluation prior to approval. The new fees for ships awarded the JIT slots are: USD 2,000 for Regular vessels; USD 4,000 for Super vessels; and USD 10,000 for Neopanamaxes.

For Regular vessels and Supers, the request must be received between 10 days and 96 hours prior to the booking date for vessels that have obtained a slot during booking periods 1 and 2, and no later than 14:00 hours 3 days prior for vessels with slots in booking period 3. For Neopanamaxes, a maximum of one JIT slot for northbound and one slot for southbound vessels will be offered per day. Requests must be received between 10 days and 96 hours prior to booking date in order to be considered.

Note that vessels that cancel their booking after the JIT request has been awarded will be subject to the JIT charge in addition to the booking cancellation fee. Requests to change the date for a booked vessel awarded a JIT slot will have to pay both the JIT charge and the booking change fee.

Transit date advancement for booked vessel (early transits)
Previously agents would engage with the Canal to get booked ships that arrive prior to transit day to transit early. If successful, the Canal would typically auction the freed-up slots. However, from 1 January there is a structured application process for early transits, but it is only available for full containerships at subject to Canal approval. The charge will only apply if the request is successful. The fee for a booked Neopanamax vessel is USD 10,000 and USD 5,000 for a booked Panamax vessel. Ships that cancel their request will still have to pay the fee, as will vessels that cancel an early transit after it has been approved.

Our action recommendations:

In view of the above changes, our core recommendations are to PLAN VOYAGES EARLIER (i.e., book as early as possible) and, if possible, AVOID TRANSIT SLOT AUCTIONS.

If you are not planning to prebook a transit, you should plan for additional waiting times, which are going to be much more difficult to predict as we expect the Canal will increase auctioning of slots that could have been used for non-booked ships on a first-come, first-served basis. This is especially the case for Panamaxes, mirroring what we have already seen in the Neopanamax segment. Generally, waiting times will fluctuate much more aggressively based on demand, so daily monitoring will be necessary.

Consequently, we recommend planning voyages earlier or conducting a review of voyage plans in order to manage potential delays. Failing to do this, or if you’re unable to get a prebooking in your desired period, you may get caught up in auctions or be in for a long wait. This is critical to understand given the prevailing unpredictability of waiting times for non-booked ships and the very high auction figures we have been seeing.

Part two – surcharges related to operational services

It is important to be aware that any vessel operative deficiencies will be assessed by the Panama Canal Authority. The following extra costs will be charged on the same day of the events and the entity paying the vessel transit fee will be responsible for covering them.

Canal Port Captain (CPC) inspections
The CPC tariff is based on inspection(s) of vessels that do not comply with transit vessel requirements or require the CPC to respond to incidents related to a mechanical failure. Inspections were not charged previously, with the Canal only charging for additional resources deployed, not for actual attendance on the ship. However, they now will charge for actual attendance on board, reflecting a push towards a fee for everything the Canal does.

There are three levels of CPC inspection criteria that the Canal will determine on a case-by-case basis: Level 1 covers draft, trim or list issues, visibility non-compliance and navigational instrument or repeaters malfunction; Level 2 covers inspection of a dead-tow ship of any size, and sea trial necessitated by vessel engine or steering deficiencies; Level 3 is when a CPC has to board and maneuver a vessel due to a mechanical malfunction during a Canal transit. This includes, but is not restricted to, engine or steering loss and grounding/collision/embarking due to a vessel malfunction.

The inspection fees are: USD 1,500 for Level 1; USD 3,000 for Level 2; and USD 5,000 for Level 3.

Emergency equipment surcharge
As per vessel requirements in its Notice to Shipping N01-2022 Section 17, the Canal allocates codes or ‘precautionary designators’ for hazardous cargoes. The new fee for a vessel carrying hazardous cargo flagged PD1 and PD3 is USD 2,000. This covers availability of emergency equipment and surveillance service at critical points in the locks, and was already provided to PD 1 and PD 3-designated ships because of the cargo risks. The operator will of course have to bear additional costs for deployment of resources (i.e., ambulances and fire trucks) in the event of an incident. We can share more details if you have any hazardous ships coming through.

Disruption surcharges
This is the really tricky one in terms of cost risk, and will apply to vessels with length overall of more than 125 feet that due to conditions or deficiencies presented prior to or during a transit or harbor movement may cause an adverse impact on transit operations. From 1 January the new charges will be classified as low or high impact depending on the type of deficiency and the time it is reported or detected, and will come on top of payment for any additional maritime resources such as tugs, line handlers, moorage and pilotage required to get ship through.

Low impact applies if a vessel scheduled for transit is underway with pilot(s) onboard from the inner anchorages, adjacent ports to the Canal entrance or mooring stations, and before entering the navigation channel, the transit is aborted due to vessel condition or deficiency, or at the request of the vessel. The fees are: USD 15,000 for Regular vessels less than 300 feet length overall; USD 20,000 for Regular vessels equal to or above 300 feet length overall; USD 40,000 for Super vessels; and USD 65,000 for Neopanamax and Panamax-plus vessels.

High impact applies if a vessel is scheduled for transit with pilot(s) on board and underway or during transit in the navigational channel, and at the request of the vessel or due to fault(s) attributable to the vessel, it is unable to continue transit. It also applies to vessels that, due to their special conditions or characteristics require the approval from the CPC to begin or continue their transit with restrictions that adversely affect the transit operation. The fees are: USD 49,000 for Regular vessels less than 300 feet length overall; USD 65,000 for Regular vessels equal to or above 300 feet length overall; USD 125,000 for Super vessels; and USD 250,000 for Neopanamax and Panamax-plus vessels.

Deficiencies that may cause the application of the disruption charge include:

  • Anchor missing or anchor windlass inoperative
  • Inoperative bow thruster
  • Non-compliant chocks and bitts
  • Compressor or air problems
  • Inoperative rudder angle indicators and other navigation equipment
  • Inadequate boarding facilities
  • Inoperative whistle
  • Engine or propeller problems
  • Excessive draft or drag
  • Bridge wings do not extend to side of vessel
  • Protruding cargo or visibility obstructed by cargo or cargo gear
  • Inadequate sanitary facilities
  • Inoperative or improper air-conditioning system
  • Slow winches
  • Wires on drums
  • Fuel not in compliance with the Canal’s maneuvering fuel requirements

Vessels that present or develop deficiencies while in transit will have 30 minutes from the time the deficiency is reported or detected to correct the deficiency or condition to avoid the application of the disruption charge.

There are also new disruption charges for vessels without self-propulsion (dead tows and dead ships). These are: USD 75,000 for Regular vessels less than 300 feet length overall; USD 100,000 for Regular vessels equal to or above 300 feet length overall; USD 150,000 for Supers; and USD 250,000 for Neopanamaxes. Note the disruption charge will be based on the dimensions of the tow or the vessel.

Approval of vessel plans
Up to now there has been no charge for getting ships’ plans approved to ensure the vessel is compliant with Canal regulations and safe to transit. But from 1 January the Canal will charge for this a special service. Charges are as follows: USD 3,000 for approval of new construction or existing vessels without approved plans; USD 1,000 for modifications of approved plans; USD 500 for validation of approved plans; and USD 6,000 for Special Service of Approval at the customer’s request (an urgent approval request due to an imminent vessel transit or visit to drydock or vessel delivery with approval provided within 96 hours).

Charges are one-time per vessel (including sisterships in a fleet) transiting for the first time and per vessel with modifications made to the ship’s plan, for example, to increase its Carbon Intensity Index (CII) rating. One positive consequence from our perspective is that if we need to expedite the reviewing of a ship’s plan, which can be quite common, the process will be faster.

Fresh water surcharge
This charge is calculated using on a complex formula based on water levels in the Gatun Lake. From 1 January the variable component ranges from 0% and 10% of the vessel’s total tolls, versus 1% to 10% previously. However, it is extremely rare for the lake level to be at 0%, so effectively this means there will be a slight reduction in the tariff when water levels are high.

Our action recommendations:

In terms of vessel deficiencies, if there is any damage prior to the vessel’s arrival or a known deficiency that may be present during transit, you must advise the agent (or ourselves) or the Canal as soon as possible. If you wait until the CPC boards your ships and identifies one, you will have to pay the additional costs.


It is important to ensure all your counterparties and business partners clearly understand the changes outlined above. The new surcharges apply under normal circumstances, and in the event of a particular cost being applied, it should be very clear who bears such charges and that they are comfortable with the risk.

We expect the push to increase complexity will continue and the Canal will look to charge more for services or move the pricing lever around to maximize income. On the environmental front, the administration is also very likely to introduce some sort of carbon pricing structure in future based on industry consensus. This means vessel energy efficiency will be increasingly important. In other words, the better your ships, the better your Customer Ranking, which is obviously an advantage when booking transits.

Finally, we recommend partnering with a good agent with expertise on the ground and proven experience to help navigate the complex booking process. At Inchcape, our Panama Canal port agency team provides comprehensive end-to-end management of transits including detailed advance information on issues such as rules updates, weather forecasts, slot availability and expected waiting times. Please do reach out to us.