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Preliminary Discussions Regarding Changes in Tolls and Regulations

that would be implemented with the Expansion of the Panama Canal

International Chamber of Shipping

December 10, 2012


DISCLAIMER. The information, documents,
reports, maps and photographs displayed in
this PowerPoint presentation is sole
proprietary of the ACP or used with the
authors authorization; therefore its
modification, reproduction, distribution or
publication for any purpose is prohibited. Its
use requires previous authorization of the ACP.
Agenda

Statement of Compliance with Anti-Competition Law


Update on Canal Traffic and Expansion
New Regulations and Requirements for Transiting
Vessels in the Expanded Canal
Brief History of Canal Tolls and Admeasurement System
General Discussion on Principles of Future Tolls
Structure
Economies of Scale Derived from the Utilization of
Larger Ships through the Expanded Canal
Next Steps
New Improved Reservation System (JIT)
The Panama Canal:
Results and Statistics FY-2012
1914 - 2012
Transits: 1,030,200
Cargo: 9,028,195,549 LT
Transits

5,000

0
10,000
15,000
25,000
30,000
35,000

20,000
1914
1916
1918
1920
1922
1924

FY 1955
1926
1928
1930
1932
1934
1936
1938
1940
FY 1975

1942
1944
1946
1948
1950
1952
1954
FY 1995

1956
1958
1960
1962
1964
1966
1968

Fiscal Year
1970
1972
FY 2012
25,943

1974
1976
1978
1980
1982
FY 1914 FY 2012

1984
1986
1988
1990
1992
1994
Transits vs PC/UMS Tonnage

1996
1998
2000
2002
2004
2006
2008
14,544
333.7

2010
2012
0
50
100
150
200
250
350
400

300

PC/UMS tonnage in millions


PC/UMS by Market Segments (Tonnage)
FY 2010 FY 2012
Main Routes - FY 2012

Total (long tons) 218.1 M


East Coast US -- Asia 84.3M
West Coast South America East Coast US 27.6M
West Coast South America -- Europe 14.4M
West Coast US Europe 9.7M
West Coast Central America East Coast US 12.2M
Canal Expansion Program Components

Deepening of Pacific and


Atlantic entrance channels
Deepening and widening of the
Gatun Lake navigation channel
Construction of new access
channel for Pacific Locks
Construction of new Post
Panamax Locks and water
saving basins in the Atlantic and
the Pacific
Increase the maximum operating
level of Gatun Lake
Agenda

Statement of Compliance with Anti-Competition Law


Update on Canal Traffic and Expansion
New Regulations and Requirements for Transiting
Vessels in the Expanded Canal
NEW PANAMAX VESSEL REQUIREMENTS

Capt. Guillermo Manfredo Jr.


Canal Port Captain
Panama Canal Authority
December 10, 2012
Definitions and requirements applicable to all
vessels intending to transit the new locks at the
Panama Canal.
Vessel Requirements
The Panama Canal Authority (ACP) reminds all customers that
vessels arriving at Canal waters, whether for docking or transiting
the Panama Canal, must comply with vessel requirements, as
stated in the Maritime Regulations for the Operation of the Panama
Canal and OPs Notice to Shipping No. N-1-20XX, Vessel
Requirements.
Definitions
Panamax: All vessels that comply with the size and draft limitations of the actual locks;
namely, 294.1 meters in length by 32.3 meters in beam by 12.04 meters TFW draft.
Panamax Plus: All Panamax vessels authorized for TFW drafts greater than 12.04
meters up to 15.2 meters and approved for transit of the new locks.
New Panamax: All vessels with dimensions greater than Panamax or Panamax Plus
that comply with the size and draft limitations of the new locks; namely, 366 meters in
length by 49 meters in beam by 15.2 meters TFW draft.

Panamax Plus
49 m (160)

15.2 m
18.3 m (60) min. New Panamax
(50)
TFWD
28.3 m (93) max.

New locks' maximum vessel size: 12,600 TEU 13,200


Approach to New Panamax Locks

APPROACH NEW PANAMAX LOCKS.


STRUCTURE.
#1
#3
#4 BALBOA REACH.
#2

BUOY #28.
Secured inside New Panamax Locks chambers

#2 #1

LOWER CHAMBER,
NEW PANAMAX LOCKS.
Moving between New Panamax Locks chambers

EXISTING GATUN LOCKS.

UPPER CHAMBER,
NEW PANAMAX LOCKS.

#2 #1

MIDDLE CHAMBER,
NEW PANAMAX LOCKS.
Requirements - New Panamax Locks
Maximum Length (1):
The maximum length overall including bulbous bow for commercial or non-
commercial vessels acceptable for regular transit is 366 meters. Vessels
transiting the Canal for the first time, whether newly-constructed or newly-
modified, are subject to inspection and prior review and approval of vessel plans.
Vessels without prior approval and/or not in compliance with Canal requirements
may experience delays or be denied transit.

New Panamax

Length of New Panamax


366 meters
Requirements - New Panamax Locks
Maximum Length (2):
The maximum length for integrated tug-barge (ITB) combination
acceptable for regular transit is 366 meters overall, including the tug. A
tug-barge combination must transit together as one unit with the tug
supplying propelling power.
Requirements - New Panamax Locks
Maximum Length (3):
The maximum aggregate overall length for non-self-propelled vessels
acceptable for transit is 305 meters, including accompanying tugs.
Accompanying tugs must lock through with the non-self-propelled vessel. One
time only transits that exceed these limitations may be permitted on a case-by-
case basis with prior approval of the Transit Operations Division Executive
Manager.
Requirements - New Panamax Locks
Maximum Beam:
The maximum beam for commercial or 49 meters
non-commercial vessels and the
integrated tug-barge combination
acceptable for regular transit is 49 meters,
measured at the outer surface of the shell
plate, including all protruding structures
below the top of the lock walls.

The maximum beam for non-self-


propelled vessels, other than integrated
tug-barge combinations, acceptable for
New Panamax
transit is 36.5 meters. One time transit of
wider vessels may be permitted with prior
approval of the Transit Operations Division
Executive Manager.
Requirements - New Panamax Locks
Draft:
The maximum permissible draft for Canal transits has been set at 15.2 meters
Tropical Fresh Water (TFW) at a Gatun Lake level of 24.84 meters or higher.
Gatun Lake density is 0.9954 tons/m at 29.4 C. This provides a safe
navigational margin of at least 1.52 meters over critical elevations in the
navigational channels and a clearance over the lock sills of 3.05 meters.

15.2 m
(50)
Requirements - New Panamax Locks
Protrusions (1):
Anything that extends beyond a vessel's hull, except for the main anchors,
shall be considered a protrusion and subject to all applicable regulations and
limitations.
The ACP is not responsible for damages to protrusions, whether permanent
or temporary.

Vessels with protrusions may be permitted to transit provided that such


protrusions will not interfere with the safe transit of the vessel or present a
hazard to Canal structures and appurtenances, as determined by the Transit
Operations Division Executive Manager. Before transit is permitted, the
master of the vessel will be required to complete a form Undertaking to
Release and Indemnify to exonerate and indemnify the ACP from liability in
case of an accident or damages sustained to or as a result of these
protrusions.
Requirements - New Panamax Locks
Protrusions (2):
Protrusions of 4 meters or less will
be evaluated based on equipment
above the lock walls and inside the
lock chambers; i.e., lighting,
assisting tugboats and fenders.
Protrusions, cargo or extensions
beyond the ships side located 16.24
meters or less above the waterline
>16.24 m are not accepted; however, the
acceptability criteria for extensions 4
meters beyond the hull and higher
than 16.24 meters from the waterline
4 m will be reviewed on a case-by-case
basis.
Requirements - New Panamax Locks
Construction, Number, and Location of Chocks and Bitts (1):
The mooring requirements, as stated in OPs Notice to Shipping No. N-1-2012,
Vessel Requirements, will remain unchanged for New Panamax and Panamax Plus
vessels. These chocks and bitts will be used by ACP tugs assisting vessels through
the new locks, as well as for mooring vessels inside the lock chambers. Shall be
capable of withstanding a SWL of 100 tons (981kN) from any direction.

SWL of 100 tons


SWL of 100 tons
Requirements - New Panamax Locks
Construction, Number, and Location of Chocks and Bitts (2):
Vessels with large flared bows, pronounced counters or unusually high freeboards,
such as LNG carriers, container vessels or vehicle carriers, may be required to fit
recessed tug bollards into the hull in lieu of the single chocks detailed in this paragraph
so that tugs can work without coming in contact with the flare or counter and without
requiring extra-long lines and/or inefficient leads.

SWL of 100 tons


Requirements - New Panamax Locks
Construction, Number, and Location of Chocks and Bitts (3):
The use of existing roller chocks on LNG carriers will be evaluated for
approval for transit, upon request, on a case-by-case basis, provided they are
located not less than 16.24 meters above the waterline at the vessel's
maximum Panama Canal draft, are in good condition, meet all requirements for
closed chocks. The equivalency of the proposed closed roller chocks shall be
submitted for review and acceptance by the ACP.
Points of Contact & Drawing Submittals
Capt. Guillermo Manfredo Arq. Octavio Stagg
(507) 272-3690 (507) 272-4191
GManfredo@pancanal.com OStagg@pancanal.com
DRAWING SUBMITALS Via e-mail: opts-an@pancanal.com, or in compact disk,
diskette or printed form directly to:
Courier mail: AUTORIDAD DEL CANAL DE PANAMA
Divisin de Operaciones de Trnsito (OPTS)
Edificio 910, La Boca
Balboa, Panam
Repblica de Panam
(Telephones: 272-4191/4296)

Regular mail: AUTORIDAD DEL CANAL DE PANAMA


Divisin de Operaciones de Trnsito (OPTS)
Balboa, Panam
Repblica de Panam

The drawings submitted via e-mail, disk or diskette should be saved preferably in PDF
or TIFF file format, or in a file format compatible with AUTOCAD. All drawing and letter
files are to be compressed together into one zip file using the WinZip file compression
software.
Agenda

Statement of Compliance with Anti-Competition Law


Update on Canal Traffic and Expansion
New Regulations and Requirements for Transiting
Vessels in the Expanded Canal
Brief History of Canal Tolls and Admeasurement
System
General Discussion on Principles of Future Tolls
Structure
The Panama Canal:
Pricing Structure
Historical Background
Panama Canal Pricing System
Historical Overview
Pricing system originated in 1912
First traffic and tolls studies made by Special Commissioner
Emory Johnson
Alternatives that were considered:
Cargo tonnage
Cargo value
Displacement tonnage
Vessels deadweight tonnage
Vessels gross tonnage
Vessels net tonnage
Mr. Johnsons final recommendations

Charge commercial vessels on the basis of their revenue


earning capacity volumetric tons
Establish a charge for non-commercial vessels based on
displacement tonnage
Develop a system to determine vessels Canal tonnage
Main reasons for his recommendations:
Easy to manage system
Simple way of distributing operational costs
Generally accepted by the shipping industry
Panama Canal Universal Measurement
System (PC/UMS)

One PC/UMS ton


equals 100 cubic feet
of cargo carrying
capacity
Panama Canal Tolls -1914 to 2013 % Chg
% Chg Cumm
Period Laden Ballast Displ. laden laden
1914 - 1938 1.20 0.72 0.50 0 0
1938 - 1974 0.90 0.72 0.50 -25.0% -25.0%
1974 - 1976 1.08 0.86 0.60 19.7% -10%
1976 - 1979 1.29 1.03 0.72 19.5% 7.5%
1979 - 1983 1.67 1.33 0.93 29.3% 39%
1983 - 1989 1.83 1.46 1.02 9.8% 52.5%
1989 - 1992 2.01 1.60 1.12 9.8% 67.5%
1992 - 1997 2.21 1.76 1.23 9.9% 84%
1997 - 1998 2.39 1.90 1.33 8.2% 99%
1998 - 2002 2.57 2.04 1.43 7.5% 114%

2002 - 2005 2.77 2.22 1.64 7.8% 131%


2005 - 2007 3.56 2.85 1.64 28.5% 197%
2007- 2009 4.76 3.81 2.09 33.7% 297%
2009- 2011 5.50 4.40 3.02 15.5% 358%
2011- 2013 5.81 4.65 3.49 5.6% 384%

Total increase
$4.61 $3.93 $2.99 384%
since 1914
Pricing system in place until 2002
The system was designed for a breakeven business model
that did not consider the commercial value of the service
provided.
No differentiation made on type and/or vessel size, nor in the
risks associated with the cargo and how they affect Canal
capacity and cost.
One price fits all system was not consistent with the
evolution of the shipping industry.
The 3 year budget basis would not have allow the possibility
to engage in an important investment project such as a
capacity expansion.
Market Segmentation - 2002

Vessel Type
Dry bulker
Container Carriers
Liquid Bulkers
Reefers
Vehicle Carriers
Passengers
General Cargo
Others
Admeasurement system applied to containerships
until April 30, 2005

8.78% of the on-deck container


cargo capacity
TEU = 10.31 CP/SUAB tons
(Internal measurement)

Total volume
Tolls per TEU - 2005
Loaded Vessel
Toll per TEU Implementation
$42 May 1, 2005
$49 May 1, 2006
$54 May 1, 2007

Vessel in Ballast
Toll per TEU Implementation
$33.60 May 1, 2005
$39.20 May 1, 2006
$43.20 May 1, 2007
ACP tolls basis for passenger ship segment
Based upon the maximum passenger capacity (PAX-MC) as specified in the
vessels International Tonnage Certificate (ITC (69)).

Application determined by the sequential application of two design


parameters:
Vessel ITC (69) Gross Tonnage.
Ratio of vessel PCUMS Net Tonnage (PAX-MC).

Vessels > 30,000 gross tons and PCUMS/PAX-MC ratio 33 charged tolls
based upon rate of $100 per passenger capacity as specified on the vessels
ITC (69).
Vessels that do not meet the above criteria continue under the PCUMS
basis.
Evolution of ACP Pricing Structure - FY 2000-2015

2000- 2002 2003 2004 2005 2006 2007 2008- 2011 2013 Until
2001 2009 2015

Variable Sub-
TOLLS PER Tariff per segmentation
New Pricing
TEU full of tankers
Structure container
$42 $49
(Two Phases)
$54
Ro-Ros now
part of Vehicle
Price Carrier
Size On- Differentiation segment
Differentiation deck by segment
cargo May 2007

New
Admeasurement
rules -
Breakeven Market Admeasure
Passenger
model Segmentation -ment
system Vessels
until 2005

Continued Segmentation
Market Segmentation - 2013
Vessel Type

Dry bulker

Container Carriers

Tankers (crude oil & products)

Liquid Gas Carriers

Chemical Carriers

Reefers

Vehicle Carriers and Ro-Ros

Passengers

General Cargo

Others
The Panama Canal:
Route Competitiveness Analysis
Model - PCRCAM
Panama Canal Route Competitiveness Analysis Model
PCRCAM
PCRCAM

Fuel Prices (HFO, IFO, MDO)


Diesel Prices (Inland)
Commodity Prices
SDR/Dollar Value
Consumer Price Index (CPI)
Rail Cost Adjustment Factor (RCAF)
PCRCAM
PCRCAM
PCRCAM
Bunker Price Variation
50.00%

40.00%
Price Variation (% year vs. year)

30.00%

20.00%

10.00%

0.00%

-10.00%

-20.00%
2010 2011 2012 2013 2014 2015 2016 2017
IHS/CERA: Bunker HFO 380 3.9% -15.9% -6.8% -11.9% 7.1% 5.6%
EIA: Bunker -1.8% 41.2% 1.7% 8.8% 7.6% 4.7% 1.6% 2.0%
EIA Diesel Fuel (distillate fuel oil) 6/barrel 21.2% 26.7% -1.4% -8.0% 6.1% 3.3% 1.3% 1.4%
FAFA Forecast 1.7% 1.6% 1.4%
Future 0.7% -0.5% -0.6%
Analyst Forecast 2.6% 3.4% 3.0%
Bunker Prices Projected Variation
Agenda

Statement of Compliance with Anti-Competition Law


Update on Canal Traffic and Expansion
New Regulations and Requirements for Transiting
Vessels in the Expanded Canal
Brief History of Canal Tolls and Admeasurement System
General Discussion on Principles of Future Tolls
Structure
Economies of Scale Derived from the Utilization of
Larger Ships through the Expanded Canal
The Panama Canal:
Market Segment Analysis and
Pricing Structure

Full Containers
Full container vessels
Costs per TEU (Asia U.S. East Coast) - Both Directions
FY 2015
Cargo Canal Cost Economies of Economies of
Vessel Size Fuel Charter Rate Ports Canal Cost per TEU
Handling Impact (%) Scale/TEU Scale/Service

4,500 599 378 71 209 882 2,139 10%

6,000 580 357 64 207 882 2,090 10% -48.50 -196,410.52

8,000 503 242 60 206 882 1,893 11% -245.85 -1,327,592.10

10,000 421 252 57 200 882 1,812 11% -326.52 -2,203,993.84

12,000 404 230 55 196 882 1,767 11% -371.76 -3,011,266.70

Assumptions for FY 2015:


Utilization Rate: Headhaul 88% Backhaul 47%
Panama Canal tolls based on $74/TEU capacity and $8/TEU loaded

Cost savings generated by economies of scale/TEU by vessel sizes:

6,000 TEU vs. 4,500 TEU: $48.50/TEU $196,410 /service


8,000 TEU vs. 4,500 TEU: $245.85/TEU $1.327 M/service
10,000 TEU vs. 4,500 TEU: $326.52/TEU $2.204 M/service
12,000 TEU vs. 4,500 TEU: $371.76/TEU $3.011 M/service

Source: ACP/PCRCAM - 2012


Proposed Toll Structure for Fiscal Year 2015
Full container vessels

A beam range toll structure is proposed for container vessels, as follows:

Beam Range Capacity Loaded Empties


Less than 80 feet
80 90.9 feet
91 99.9 feet
100 106.2 feet
91 106.2 feet*
106.3 119.9 feet
120 139.9 feet
140 160 feet
*Draft exceeding 39.5

Establish a vessel differentiation for the use of the current and the new locks.
An analysis of the container vessel fleet indicates a range of vessels from 3,000 TEU to 14,000 TEU
that would require the use of the new locks if they were to transit through the Panama Canal.
The structure by beam helps provide economies of scale for the larger vessels.
Improve the competitiveness of the Panama Canal, particularly in the backhaul.
The Panama Canal:
Market Segment Analysis and
Pricing Structure

Dry Bulks
Dry Bulk Vessels
Costs in $/MT Grain Route US Gulf to Asia
FY 2015

Charter Cargo Total Canal Cost Economies of Economies of


Vessel Size Fuel Port Canal Inland
Rates Handling Cost Impact (%) Scale/MT Scale/Total

55,000 DWT 8.55 13.04 2.91 3.38 8.17 30.72 66.77 5.1%
95,000 DWT 6.55 9.36 2.73 3.19 8.17 30.72 60.71 5.2% -$6.06 -$518,180

Assumptions for FY 2015:


Utilization Rate: 90%
Panama Canal tolls based on approved tariff for AF2014 (Estimated effective tariff = $4.71 per PC/UMS)

Cost savings generated by economies of scale by vessel sizes:

95,000 DWT vs. 55,000 DWT: $6.06/MT $518,180/Trip

Source: ACP/PCRCAM - 2012


Dry Bulk Vessels
Costs in $/MT Coal Route Colombia to Asia
FY 2015
Charter Cargo Total Canal Cost Economies of Economies of
Vessel Size Fuel Port Canal
Rates Handling Cost Impact (%) Scale/MT Scale/Total

70,000 DWT 7.60 8.31 1.19 3.63 4.22 24.94 14.5%


120,000 DWT 5.20 6.91 1.02 2.41 4.22 19.77 12.2% -5.17 -$558,358
170,000 DWT* 4.92 6.31 1.08 2.05 4.22 18.57 11.0% -$6.37 -$865,882
*vessels this size are estimated to transit at 80% utilization

Assumptions for FY 2015:


Utilization Rate: 90%, except vessels 170K DWT at 80%
Panama Canal tolls based on approved tariff for AF2014 (Estimated effective tariff = $4.71 per PC/UMS)

Cost savings generated by economies of scale by vessel sizes:

120,000 DWT vs. 70,000 DWT: $5.17/MT $558,358/Trip


170,000 DWT vs. 70,000 DWT: $6.37/MT $865,882/Trip

Source: ACP/PCRCAM - 2012


Why use DWT instead of PCUMS?

ANNA S Cargo
IMO: 9207778 TM:
MT: 59,279.54
Carbn
COAL
DWT: 75,966 Utilizacin:
Utilization: 78.0%
PCUMS: 33,095
CPSUAB:
PCUM: Peaje:
$/MT: $2.37/TM

FU MIN Cargo
IMO: 9154115 MT:59,269.67
TM:
Granos
GRAINS
DWT: 72,437 Utilization: 81.8%
Utilizacin:
PCUMS: 31,383
CPSUAB:
PCUMS Peaje:
$/MT: $2.25/TM

MEDI TA Cargo
Mineral
IRON de IMO: 9286889 TM:
MT: 59,257.18
Hierro
ORE DWT: 76,633 Utilizacin:
Utilization: 77.3%
CPSUAB:
PCUMS: 32,841
PCUM: Peaje:
$/MT: $2.35/TM

Control the competitiveness of the Panama Canal


Why use DWT instead of PCUMS?
Transit Date Vessel Name DWT PCUMS Cargo (MT ) Utilization $/MT Commodity Route

Case #1
11/09/11 YASA H.MEHMET 83,482 37,883 61,297.31 73% 2.62 Grains USEC to Asia
08/03/12 KEY EVOLUTION 83,416 37,879 61,699.65 74% 2.60 Coal USEC to Asia
11/17/11 YASA H.MULLA 83,482 37,883 60,495.30 72% 2.65 Iron Ore USEC to Asia

Case #2
04/18/12 PORT MENIER 53,825 26,931 47,374.01 88% 2.43 Grains USEC to Asia
06/23/12 MEDI NAGASAKI 53,098 24,327 47,372.58 89% 2.20 Coal South America WC to South America EC
02/22/12 SANKO TITAN 52,514 24,943 47,391.81 90% 2.25 Iron Ore South America EC to Asia

Case #3
01/22/12 EVER YOUNG 73,081 31,956 57,627.09 79% 2.36 Grains USEC to Asia
02/07/12 HARVEST MOON 73,040 31,898 57,656.98 79% 2.35 Coal USEC to Asia
11/18/11 NAVIOS LIBRA II 70,136 31,068 57,647.84 82% 2.29 Iron Ore USEC to Asia

PCUMS Volumetric measure

The utilization of a vessel and the


competitiveness of the route
depends on the cargo and the cost
per ton. of the commodity.
Proposed Toll Structure for Fiscal Year 2015
Dry Bulk Vessels
Proposed Toll Structure for Dry Bulk Vessels
By Commodity
DWT Ranges
Grains Coal Iron Ore ODB
Ballast
Actual New Actual New Actual New Actual New
Start End
Locks Locks Locks Locks Locks Locks Locks Locks
0 20000
20001 40000
40001 60000
60001 85000
85001 100000
100001 120000
120001 140000
140001 160000
160001 over
A structure based on DWT allows future evolution of the structure to a fix/variable basis
A structure based on DWT relates better to the concept of actual cargo and vessel utilization
Differentiation by commodity helps increase competitiveness in specific routes.
Establish a vessel differentiation for the use of the current and the new locks.
A flexible structure by ranges helps to provide even better economies of scale for the larger vessels
The Panama Canal:
Market Segment Analysis and
Pricing Structure

Liquid Bulks
Tanker
Costs per Ton ($/mt) (WCSA U.S. East Coast)

Vessel Size Charter Cargo Cost per Canal Cost Economy Economies of
Fuel Ports Canal
(DWT) Rate Handling Ton Impact (%) of Scale Scale/Total
70,000 $ 2.64 $ 2.72 $ 2.10 $ 2.95 $ 1.21 $ 11.61 25%
100,000 $ 2.61 $ 1.95 $ 1.97 $ 2.76 $ 1.21 $ 10.50 26% -1.11 $ 99,900
140,000 $ 2.54 $ 1.71 $ 1.99 $ 3.25 $ 1.21 $ 10.70 30% -0.91 $ 101,920

Assumptions for FY 2015:


Utilization rate: 70,000 905, 100,000 90%, 140,000 80%
Panama Canal Tolls based on FY 2014 rates

Cost Savings generated by economy of scale by vessels sizes:

100,000 DWT vs 70,000 DWT: $1.11/mt $99,900 /Trip


140,000 DWT vs 70,000 DWT: $0.91/mt $101,920 /Trip

Source: ACP/PCRCAM - 2012


Why use DWT instead of PC/UMS?

Crude oil and petroleum product tankers are classified by


the maritime industry by their size based on deadweight
(DWT) tons.

The cargo capacity is expressed in DWT tons.

The use of DWT provides a better understanding of the


utilization rate of a vessel because it is more correlated to
the commodity type.
The use of DWT is a better unit for the analysis of Panama
Canal competitiveness-
Tanker: Proposal Pricing Structure Based
on DWT Ranges
Pricing Strategy Based on DWT Ranges

DWT Range Tankers


Ballast
Start End Actual Lock New Lock
0 20000 $ - $ - $ -
20001 40000 $ - $ - $ -
40001 60000 $ - $ - $ -
60001 85000 $ - $ - $ -
85001 100000 $ - $ - $ -
100001 120000 $ - $ - $ -
120001 140000 $ - $ - $ -
140001 160000 $ - $ - $ -
160001 above $ - $ - $ -
Chemical Tanker: Proposal Pricing Structure Based on
CP/SUAB

Laden (CP/SUAB)
1st 10,000 $ -
2nd 10,000 $ -
Rest $ -
Ballast (CP/SUAB)
1st 10,000 $ -
2nd 10,000 $ -
Rest $ -
Why use m3 instead of PC/UMS?
LPG and LNG carriers are classified by the maritime
industry by their size using cubic meters (m3).
The cargo capacity for LPG and LNG ships are
expressed in cubic meters (m3).
The cubic meter is a unit commonly used for the trade of
LPG and LNG.
LNG contracts are long term and expressed in cubic
meters (m3).
It eliminates the pricing differentiation caused by the use
of PC/UMS. The cubic meter eliminates this difference
when comparing the two LNG shipbuilding technology
types, moss and membrane.
LPG: Proposal Pricing Structure Based on Cargo Capacity
in Cubic Meters (m3)

Laden (m3)
1st 10,000 $ -
2nd 15,000 $ -
3rd 30,000 $ -
Rest $ -
Ballast (m3)
1st 10,000 $ -
2nd 15,000 $ -
3rd 30,000 $ -
Rest $ -
LNG: Proposal Pricing Structure Based on Cargo Capacity
in Cubic Meters (m3)

Laden (m3)
1st 60,000 $ -
2nd 30,000 $ -
3rd 30,000 $ -
Rest $ -
Ballast (m3)
1st 60,000 $ -
2nd 30,000 $ -
3rd 30,000 $ -
Rest $ -
The Panama Canal:
Market Segment Analysis and
Pricing Structure

Vehicle Carriers / RoRos


Vehicle Carriers/RoRos
Costs per CEU (Asia U.S. East Coast) - Both Directions
FY 2015
Cargo Canal Cost Economies Economies of
Vessel Size Fuel Charter Rate Ports Canal Cost per CEU
Handling Impact (%) of Scale/CEU Scale/Service
4,500 $ 173 $ 141 $ 15 $ 54 $ 102 $ 485 11%
5,000 $ 140 $ 115 $ 14 $ 54 $ 102 $ 426 13% -59.05 -236,199.88
6,000 $ 138 $ 108 $ 14 $ 53.7 $ 102 $ 415 13% -70.03 -336,147.89
7,000 $ 119 $ 97 $ 13 $ 52 $ 102 $ 384 14% -101.19 -566,657.43
8,000 $ 130 $ 89 $ 13 $ 49 $ 102 $ 383 13% -102.26 -654,481.73

Assumptions for FY 2015:


Utilization Rate: Headhaul 80% Backhaul 20%
Panama Canal tolls based on FY 2013 rates

Cost savings generated by economies of scale by vessel sizes:

5,000 CEU vs. 4,500 CEU: $59.05/CEU $236,200/service


6,000 CEU vs. 4,500 CEU: $70.03/CEU $336,148/service
7,000 CEU vs. 4,500 CEU: $101.19/CEU $566,657/service
8,000 CEU vs. 4,500 CEU: $102. 26/CEU $654,482/service

Source: ACP/PCRCAM - 2012


The Panama Canal:
Toll Rate Ranges (Bands)
Toll Rate Ranges (Bands)

Possible Toll Structure with Rate Ranges


Tolls per Unit of Measurem ent proposed
Vessel Size Range Top Limit in DWT
Market Segment
20K 40K 60K 80K 100K 120K 140K 160K Over
Top T1 T2 T3 T4 T5 T6 T7 T8 T9
Laden (shown)
Bottom B1 B2 B3 B4 B5 B6 B7 B8 B9
Top T1 T2 T3 T4 T5 T6 T7 T8 T9
Ballast
Bottom B1 B2 B3 B4 B5 B6 B7 B8 B9
Agenda

Statement of Compliance with Anti-Competition Law


Update on Canal Traffic and Expansion
New Regulations and Requirements for Transiting
Vessels in the Expanded Canal
Brief History of Canal Tolls and Admeasurement System
General Discussion on Principles of Future Tolls
Structure
Economies of Scale Derived from the Utilization of
Larger Ships through the Expanded Canal
Next Steps
New Improved Reservation System (JIT)
The Panama Canal:
Conclusions and Next Steps
Conclusions
The Expanded Canal will continue to provide to its clients the traditional
values that have been steadily improved over the years and will offer
additional values related to economies of scale and increased capacity.
The Canal also expects to benefit from the additional values added and
increased capacity.
The Canal is seeking feedback from the industry, especially in respect to
their anticipated needs and in regards to information requirements that the
Canal will have in order to meet those identified needs.
Volume growth and management is expected to be a critical driver of
Canal strategy in the initial years of the Expanded Canal operation.
The Canal wants to develop pricing structures that more closely align with
the business models of the industry. Structures which also facilitate the
strategies of volume growth.
The Canal is sponsoring a Conference in Panama in 2014.
Near Term / Next Steps
Analysis of Client Feedback from December 10th Kick-off meeting
with ICS.

January 18, 2013 meeting with World Shipping Council in


Washington DC.

Early February meeting in London with Liquid and Dry Bulk


segments.

Analysis and incorporation, where appropriate of unsolicited or


additional (independent of meeting) inputs from interested parties.

Consolidations, of feedback and results of currently scheduled


meetings, development of any appropriate adjustments, internal
ACP consultation and feedback to ICS.
The Panama Canal:
Improved Reservation System
Just in Time Initiative
Just inTime Initiative Purpose

ACP is developing the concept of a just-in-time


transit, which will consist of a value added service for
booked vessels employing the Panama Canal.
Vessels that elect a Just-in-Time transit service shall
coordinate closely with ACP a transit time within
permissible operational windows, depending on
vessel type and restrictions.
Such vessels shall arrive at Canal waters on time to
be serviced expeditiously.
Just in Time Enablers
Satellite AIS Vessel monitoring and tracking
Just in Time Enablers
Transit planning and tentative service time notifications

database Arrival
ETAs Planning Algorithm
list

Tentative
Transit
Time

notifications
Just in Time Trial Period
Operational tests of the just in time concept will begin soon to
acquire as much information as possible in order to establish its
feasibility and value.
The information gathered during the development and completion of
the tests will help in the assessment of its effectiveness and to
perform additional system adjustments.
Modifications to our Maritime Regulations, Operations Manuals,
guidelines and procedures that apply to the implementation of the
new service will be required.
The operational test will initiate in January 2013 for approximately
two or three months.
Will need customer participation to insure proper information is
transmitted for adequate vessel tracking and precise transit
scheduling.
World Maritime and Logistics
Date Outlook Panama 2014
February 4 6, 2014

Objectives
Raise awareness of the upcoming opening of the expanded
Canal.
Promote Panamanian transportation and logistics platform among
maritime industry members.
Provide information on Canal tolls, operation procedures and
regulations applicable to the expanded Canal.
Promote discussion on topics related to the industry situation,
specific market segments, transportation and logistics.
Present ACPs new commercial business development activities.
Register at least 400 attendees.
World Maritime and Logistics
Outlook Panama February 2014
Audience

Port Authorities
Shipowners and Shipping Companies
Shipping agencies
International Maritime Associations and Organizations
Retailers
Exporters
Maritime classification societies
Shipyards
3PL
World Maritime and Logistics
Tracks Outlook Panama February 2014
1. Maritime Outlook
Container
Dry Bulk
Liquid Bulk & LNG
Car carrier/roro
Cruise
2. Logistics & Supply Chain
Retailing & Distribution
Transshipment
Panamas Logistics Platform-Latin American Opportunities
3. Trade Routes
4. Panama Canal Users Forum (tolls, booking, regulations, operating
procedures applicable to the use of the waterway)
5. New business development at the Panama Canal Authority
Preliminary Discussions Regarding Changes in Tolls and Regulations

that would be implemented with the Expansion of the Panama Canal

International Chamber of Shipping

December 10, 2012