The cost of using the Panama Canal has risen in recent years — excessively so, President Trump has asserted. The canal operator says droughts, investments in upgrades and sheer demand are among the reasons.
But if Mr. Trump wrests lower canal fees out of Panama, American consumers may not feel much difference, because canal costs make up only a small part of the retail cost of most goods. One analysis concludes that going through the canal adds 10 cents to the cost of a coffee maker.
Panama Canal shipping fees were not a big issue until Mr. Trump raised the matter last year.
As well as highlighting the costs of using the canal, American politicians have security concerns. They point out that China has made big investments in Panama’s infrastructure and that a Hong Kong company operates ports at both the Atlantic and Pacific ends of the canal. Secretary of State Marco Rubio, in a visit to Panama on Sunday, appeared to escalate those security concerns with Panama’s leader.
China has no role in operating the canal, a job done by the Panama Canal Authority, a Panamanian agency. The United States built the canal in the early 20th century, mostly with laborers from the Caribbean, and ceded it to Panama in 1999 on condition that it be neutral.
Mr. Trump has said that move, under a 1978 treaty, was a blunder by the United States, and he has refused to rule out military force to retake the waterway. In response, President José Raúl Mulino of Panama declared recently, “The canal is and will continue to be Panama’s.” He reiterated that on Sunday after meeting with Mr. Rubio: “There is no question that the canal is operated by Panama and will continue to be so.”
The canal is crucial for the U.S. economy because it permits a shorter route between the East Coast and Asia than traveling across the Atlantic and Indian Oceans. Forty percent of United States container traffic and large amounts of U.S. energy exports travel through the canal on vessels paying tolls and other fees to use it.
Canal revenues have risen faster than traffic.
The canal authority did not respond to requests for a list of historical tolls and fees or other comment. But it annually discloses how much it collects from ships using the canal. That has surged in recent years by far more than the number of journeys through the waterway.
In the 12 months through September 2023, the latest figures available, tolls and service fees totaled $4.8 billion, 62 percent higher than five years earlier. Over that period, passages through the canal rose only 2 percent, to 14,080 from 13,795 in 2018.
As a result, in 2023, the canal on average collected $341,000 a vessel, compared with $215,000 in 2018 — a 59 percent jump.
Some funds go to Panama. Others are reinvested in the canal.
Higher fees are certainly part of it, including increases this year in the charges to reserve time slots for passage.
The Panamanian government depends on large payments from the canal, most recently receiving a nearly $2.5 billion contribution. But the canal authority also needs money for investments that ensure the canal’s smooth functioning.
Droughts have sometimes forced the authority to slash the number of vessels using the canal as a way of conserving water. The canal’s locks use enormous amounts of water. A single ship’s passage is estimated to consume as much water as half a million Panamanians use in one day. A project intended to provide another water source could cost as much as $1.6 billion.
The authority has also acted shrewdly to maintain revenue during challenging times, collecting more when passages were reduced during the last drought. Shippers scrambling to secure a spot were at times prepared to pay millions of dollars in special auctions.
“While we from time to time complain about the price, which sometimes can be exorbitant, we generally think the price is right, but we want to maintain our right to complain about it,” Oystein Kalleklev, chief executive of Flex LNG, a shipping company that sends vessels through the canal, said in an email.
Lower canal fees may not make much difference for consumers.
Because about 70 percent of the cargo volume passing through the canal starts or finishes at U.S. ports, Americans would derive some benefit from lower canal tolls. But the saving might be only a small portion of an item’s retail cost.
Judah Levine, head of research at Freightos, a digital marketplace for shipping, estimates Panama Canal fees for individual consumer items. He said they came to around $11 for a French-door refrigerator, which sells for over $1,000, and as little as 10 cents for a roughly $40 coffee maker. (Big items cost more because fewer fit into a shipping container.)
It costs around $6,600 to ship a container from East Asia to a port on the East Coast, with the canal fee accounting for about 4 percent of that sum, according to Freightos.
“I don’t think many people in the industry point to canal fees as kind of a driver of high costs for shippers,” Mr. Levine said.
