Bunge and Cargill seek lower Panama Canal tariffs in bid to change grain trading patterns
The world’s largest grain traders are putting the squeeze on the Panama Canal Authority. Reuters is reporting that Brazilian port operators, including ones operated by Bunge and Cargill, are seeking to get the canal authorities to slash tariffs in order to get their shipments to key client, China, cheaper.
The grain group claim that currently shipping grains from Brazil’s northern ports via the Cape of Good Hope is almost $206,000 cheaper on a per-ship basis than using the canal, despite being up to five days longer.
The private port operators association, ATP, also includes pulp and paper producer Suzano Papel e Celulose.
ATP officials told Reuters the tariff proposal must be made by the Brazil’s agriculture ministry to the country’s foreign affairs ministry, which would be responsible for negotiating the terms with Panamanian authorities.
I am sure this math is directly correlated to operational costs assigned to the voyage. If these were the only costs then one would assume that the long way around would be fine. The reality is of course that there is a cumulative lost opportunity cost given the 5 extra days per voyage and as well the increased maintenance cost associated with PM.