Quijano: Panama Canal Not Impacted Yet by US-China Trade Tensions

The brewing ‘tit for tat’ trade war between the world’s top economic powers, the United States (U.S.) and China, has not had an effect on the Panama Canal’s trade volumes so far, according to the waterway’s administrator, Jorge L. Quijano.

However, the canal authority is keeping a close eye on the tariffs being imposed by the two countries, as China and the U.S. are the two largest users of the waterway.

In the latest turn of the events, the Trump Administration announced its plans to proceed with placing additional tariffs on some USD 200 billion worth of imports from China, which will take effect on September 24.

The latest round of tariffs will be set at a level of 10 percent until the end of the year. On January 1, the tariffs will rise to 25 percent, Trump said.

“The Panama Canal is an enabler of trade and anything that could disturb the free movement of merchandise is a reason of concern for us,” Quijano told World Maritime News.

“So far, the canal has not experienced any effects from this commercial debate. As a matter of fact, 2018 is turning out to be a very good year for the Panama Canal, in which we have experienced significant tonnage growth. Having said that, we remain alert and monitoring the developments in the different markets we serve. For the canal, products such as soybean and LNG are particularly sensitive.”

As explained, soybean represents less than 5% of the grain that transits the Panama Canal from the U.S. going to China; therefore, the impact, if any, is expected to be moderate to low.

In terms of LNG, flows from the Gulf of Mexico and Maryland into China represent nearly 20% of total volumes; however, there are no active contracts yet to deliver LNG from the U.S. into China.

“The flows observed so far are spot cargoes done by traders and, as time goes by, we see more and more contracted cargoes using the canal for the final deliveries in Japan and South Korea, replacing spot movements,” he added.

“Historically, the Panama Canal has witnessed a number of cycles and crisis, which somehow have not affected the performance of the waterway, since usually when one product underperforms, there are others doing well at the same time.  With the diversification of over 144 routes worldwide, it is not unusual to have some routes compensating others that are having economic difficulties or geopolitical stress.”

Quijano added that he remains optimistic that China and the U.S. will resolve their trade differences.

“In the meantime, we continue to seek new markets and innovate to find better and more efficient ways to handle our traffic in a safe and reliable manner,” he concluded.

World Maritime News Staff