The Panama Canal Authority has reduced the number of ships able to transit the waterway daily to 22 at the older Panamax locks and 10 at the Neopanamax locks, effective July 30, the canal authority said July 25.
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Register NowUntil July 30, the canal was operating under Condition 1.a, which allows for 28-32 ships to transit per day the older Panamax locks. The daily transit allotment for the Neopanamax locks prior to July 30 could not be confirmed.
The Panama Canal Authority was not immediately available for comment.
The reduction in transit allotments was a result of water levels at the Gatun Lake continuing to decrease amid the dry season, and the canal authority indicated it was a necessary measure so that additional draft restrictions could potentially be avoided.
Shipowners were advised to use the canal authority's transit reservation system and apply for reserved slots, so that they may try and avoid extensive delays.
"We already have a ship that waited 10 days + and is still in sixth position for transit," a clean tanker owner said. "Another arrived three days ago and no more slots available for prebooking. We tried auctions, but they consistently [are going] above $350,000. It's really hurting us. Never seen it like this."
Another shipowner went on to say that there were very limited third period slots still being offered, so the only way to get through earlier is to go by auction.
Due to the excessive wait times, shipowners have already begun to show their preference for staying local and avoiding the Panama Canal altogether.
Another shipowner added that the US Gulf Coast-Chile clean tanker run is pricing higher, as owners are reluctant to go through the canal with all of the delays that they would face when ballasting back to the USGC.
Platts, a part of S&P Global Commodity Insights, assessed freight for the 38,000 mt USGC-Chile route at $2.6 million July 25, a high not seen since April 11.
The Panamax locks allow for beam lengths of 91-107 feet (27.74-32.62 meters), while the Neopanamax locks allow for beam lengths of 107 feet and over. Most clean Medium Range and Long Range 1 tankers fall in the super class, with standard beams around 32 meters on both vessel classes.
LNG flows see mixed response
Other freight markets have shown mixed responses to the restrictions set forth by the canal authority. In terms of LNG flows, Cheniere most notably announced earlier this month that it would be avoiding the Panama Canal to ship LNG due to unfavorable market conditions such as increased transit wait times.
The Panama Canal serves as the gateway to the Asia LNG market for US exporters, serving as the quickest way to reach what has historically been considered the largest market for the product.
While Cheniere has looked to other routes to send LNG abroad, other companies continue to send product through the Panama Canal. This month, a total of 21 LNG carriers arrived at the canal through July 24, S&P Global data showed. In comparison, 20 carriers arrived in Panama between the same period in 2022.
The US LNG export market has strengthened recently alongside a global boost in prices, with the Platts Gulf Coast Marker for US FOB cargoes loading 30-60 days forward rising 64 cents/MMBtu on July 25 to be assessed at $8.91/MMBtu.