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Time Is Money

Sigma Investment Counselors

July 27, 2018

Recent data provided by the Panama Canal Authority suggests that total annual revenues for 2018 will be ahead of a strong 2017.  Approximately half of both revenues and crossings comes from shipments to U.S. East Coast ports.

The alternative route for shipments from Asia uses the Suez Canal.  Sailing time via the Panama Canal is more than 10 days less than the longer Suez Canal route.  Rising fuel prices are partially mitigating the high tolls associated with a Panama Canal transit.

While calculating tolls is quite complex.  The total cost of a transit via the old locks can approach $0.5 million, while use of the new, larger locks can easily exceed $1.0 million.  The strength in demand for Panama Canal transits is a clear indicator that the saving in sailing time is worth the costs.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA

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