`Shipping moves closer to 80 percent of the world’s cargo by volume, making transportation costs a critical economic factor´, says NHH researcher Gabriel M. Fuentes, himself from Panama.
In February, Gabriel M. Fuentes and PhD Torstein Takvam will deliver a workshop to the Panama Canal. During their visit, they will also collaborate with the Canal and other partners on a research project aimed at exploring avenues to reduce shipping emissions. This includes developing decision-support tools for investments and optimizing operational processes to enhance efficiency and sustainability.
President-elect Trump has ramped up his rhetoric globally, with Panama now in the spotlight. Experts suggest his focus on the Panama Canal ties into broader U.S. goals, such as managing inflation and controlling migration towards the U.S. border.
Gabriel Moises Fuentes, an Assistant Professor in shipping economics and analytics at the Department of Business and Management Science and affiliated with the Centre for Shipping and Logistics, highlights the financial rationale behind Trump´s interest in the Canal.
`High inflation in recent years is partly linked to transportation costs, Fuentes explains.
`With shipping moving nearly 80 percent of global cargo, effort to reduce transportation fees – especially at the Canal – could help lower consumer prices in the U.S. President Biden has also criticized shipping companies for their high profit margins, underscoring the role of logistics in inflation.
Trump´s push to reduce Panama Canal fees, Fuentes notes, align with this broader economic strategy.
Trump’s renewed interest in the Panama Canal also reflects his trade war agenda with China, a key feature of his previous presidency, the NHH shipping expert elaborates.
`As part of his trade war rhetoric, Trump has claimed “China is controlling the Canal”. The statement is not true but is nurtured by the fact that at Hong Kong-based company, Hutchinson Port Holding, operates two ports at the entrance of the Canal´, Fuentes clarifies.
The Panama Canal was transferred to Panama in 1999 under the Torrijos-Carter treaty. One of the signatories, former President Jimmy Carter, passed away last week, Fuentes notes.
`And together with that treaty, the Neutrality treaty was signed. This ensures Panama´s control of the Canal. While it guarantees the neutral service to all nations of the world, it gives the right to the U.S. to intervene, but only if such neutrality is compromised´.
