Author: Tronserve admin
Sunday 25th July 2021 04:26 AM
US-China Trade Tensions Hit Panama Canal Revenues
The trade concerns between the United States and China is producing waves at the Panama Canal. Cargo from the US to China going through the key waterway has slumped this year due to the Asian giant slits its imports of American food and fuel, reported on Panama Canal Authority CEO Jorge Luis Quijano.
Amid the conflict, Japan has force out China as being the canal's second-largest user, while US businesses continue the canal's prominent customers, he said.
US President Donald Trump complained last week that China hasn't heightened its purchases of American farm products, a promise he said that he secured last month at a meeting with President Xi Jinping. China is relying more on countries just like Qatar, and Trinidad and Tobago, for gas, and Brazil for soy, according to Mr Quijano. "This is a bigger disadvantage to the US, because China just buys the same products elsewhere," he said.
The canal estimates profit of US$3.1 billion this fiscal year, down one per cent from 2018, which would be the first drop since the US$5 billion canal improvement was inaugurated three years ago.
The trade conflict has chopped traffic from the US to China by over eight million tons since the present fiscal year started in October, according to Mr Quijano. Traffic via the canal on the most important route, from the East Coast of the US to Asia, was 78 million tonnes in the 2018 fiscal year.
Regardless of this, Moody's Investors Service this year enhanced the canal's credit rating to A1, from A2, quoting its strong financial performance since the expansion, and low debt levels.
Mr Quijano said the US-China dispute could cost the canal more money if tensions continue. That being said, it may get a boost from new LNG terminals scheduled to come online in the coming months in the US states of Georgia and Texas which will help supply increasing demand from Japan and South Korea, he said.
Low water levels a result of a drought this year pushed the canal authority to minimize the size of vessels allowed to cross the new set of locks.
A draft limit of 44 feet (13.4m) that basically affects container ships will potentially remain in effect for the coming weeks until rainfall picks up, Mr Quijano said. The canal has studied the possibility of building an additional set of locks for even bigger ships, but demand isn't likely to merit such an undertaking in the next 10-15 years, he said.
Source: THE BUSINESS TIMES