FMC highlights Panama Canal’s importance to US economy

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FMC highlights Panama Canal's importance to US economy

The Federal Maritime Commission (FMC) Chairman Louis E. Sola and Commissioner Daniel B. Maffei spoke before the U.S. Senate Committee on Commerce, Science, and Transportation about the operation, control, and expense of using the Panama Canal.

On 28 January, during his statement, Chairman Louis E. Sola expressed that, despite being over a century old, the Canal remains a vital waterway for maritime activity, emphasizing that the capacity of ships to traverse the Panama Canal benefits the US more than any other country.

Sola stated: “The United States, more than any other nation, benefits from ships being able to transit the Panama Canal. In excess of 40 per cent of US container traffic, valued at roughly $270 billion annually, transits this waterway. Vessels of all sorts—container ships, passenger vessels, bulk and breakbulk vessels, and product tankers—use the waterway to carry cargoes to and from the United States.”

The FMC has legislative authority under the rules governing international shipping practices to investigate and perhaps take necessary counter-action if it discovers that a foreign country’s laws or regulations have contributed to “conditions unfavourable to shipping in foreign trade.”

The Panama Canal’s reduced capacity, along with the de facto closure of the Suez Canal owing to Houthi attacks in the Red Sea, had major ramifications for ocean commerce, including increased rates, taxes, and/or transit delays.

Without a solution, projections suggest that by 2050, the Canal’s capacity might drop by as much as 50 per cent, which would have severe effects on global trade and the US economy.

Commissioner Daniel B. Maffei revealed that in July 2024, he and other members of the Commission had a meeting with the then recently elected President, Jose Mulino, as well as several senior officials in his administration to discuss maritime policy.

READ: Vessels through Panama Canal cut wait times by 15 hours

Maffei commented: “As we learn more about how Panama and the Canal Authority would handle another drought crisis and receive more input from American importers and exporters, the Commission remains prepared to take any appropriate action, if warranted.”

Sola added: “More than one-third of the US economy is tied to goods, commodities, and inputs that move by sea, and the Panama Canal is an indispensable part of the ocean-linked supply chains on which we are reliant. Safeguarding the viability of the Panama Canal for the coming century and beyond must be a priority we meet if we want to remain economically competitive.”

In November 2024, Bloomberg reported that then President-elect Donald Trump’s anticipated policy mix, which includes increased tariffs, may diminish demand for container shipping services in 2025.

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