THE Panama Canal Authority (ACP) has sought to reassure the shipping industry that it is still very much open for business despite its well-publicised problems with falling water levels.
“The Panama Canal continues its operations at the service of international maritime trade, taking measures to ensure the smooth and safe traffic of ships, despite adverse weather conditions,” the ACP said in its latest weekly update.
It said that while more vessels were waiting to use the canal since it brought in draught and transit restrictions, traffic was continuing on the waterway.
Figures from the ACP show a total of 126 vessels in the queue for transit, 47 of which have reserved bookings and which will pass through “without delay, on schedule”.
“Those who do not have reservations are waiting between nine and 10 days, when before they waited about five days,” the ACP said.
It aimed to keep the queue at no more than 90 vessels but added similar conditions had been seen in previous years.
The Panama Canal continues to carry 57.5% of the total cargo transported in container ships from Asia to the US east coast, the same percentage as in 2022.
“This figure has not decreased, so the canal continues to be the preferred route for the container ship segment, which has been minimally impacted by the adjustments to the draught and transits, associated with the measures incorporated to conserve water.”
ACP said that during the first nine months of its fiscal 2023, 69.6% of neo-panamax containerships had a draught of less than 44 ft, with the remainder able to transit by unloading containers to multimodal transport across the isthmus.
“Despite current conditions, the cost of transiting merchandise through the Panama Canal represents, on average, 0.5% of the value of the cargo that goes in the container,” the ACP said.
“In that sense, the impact of the transitional measures that have been established should not be significant on the final price of goods.”
The restrictions placed on the canal could last for up to 10 months, which would take the canal through the next rainy season and allow the water table to replenish before the next dry season.
Alphaliner said there had been no serious impact on Asia-US east coast trade.
The number of daily transits had been reduced from 36 to 32 with 10 passage slots reserved for the big locks and 22 for the old locks, it said.
Although only eight slots a day are available to vessels that arrive without reservations, liner operators reserve their transits ahead of time and have a priority to pass the many bulkers and tankers waiting in the anchorages at both sides of the canal.
“From a container carrier perspective it is important to understand that we do get access to the crossings that we require,” said Maersk Americas head of operations Lars Ostergaard Nielsen.
“We are facing some costs in terms of the draught restrictions, which means we are losing a level of capacity in terms of how much cargo we can carry, but we are not faced with significant waiting times. It is not a major concern at the current point in time for us.”
Speaking in a panel discussion on Al Jazeera, Nielsen said the main impact of the restrictions on supply chains was that there was a little less capacity available on services that cross the canal.
“This is being taken care of in the container segment by sending additional vessels that face less restrictions, using the old locks,” he said.
Nevertheless, there are concerns that other sectors still face delays and rising costs due to the backlogs at the canal.
Analysts at Braemar said efforts by the ACP had limited bulker queues but were contributing to longer haul voyages as shippers sought to avoid Panama.
Moody’s warned that although only 2.5%-3.5% of global seaborne trade passed through the canal, supply chains were sensitive to external events, as had been demonstrated by the impact of the Suez Canal closure in 2021.
It said the impact would be felt most by importers of liquified petroleum gasses such as propane and butane.
“The equivalent of 26% of the cargo transported by sea by LPG vessels passed through the Panama Canal in 2022,” Moody’s said.
“Although markets have already digested the ACP’s current restrictions on ships’ draughts, we believe the prospect of these limits staying in place for a prolonged period will increase transport prices and availability of grains, oil products, liquified natural gas and petroleum products and certain chemicals.”
Gas carrier major Avance Gas warned that the new booking system was making it more difficult and expensive to transit the canal.
It said while draught restrictions had not directly affected very large gas carriers, the measures had created a lot of disturbances in the booking system, leading to delays for both northbound and southbound passages in both the neo-panamax and the old panamax locks.
“From end-July, the one to two daily slots through the neo-panamax locks reserved for un-booked vessels have been auctioned out to the highest bidder, making scheduling a VLGC through Panama with insufficient customer ranking a very costly exercise,” it said.
“Delays as such have increased significantly so far through August, not only for neo-panamaxes but also for those of the old panamax locks, often even surpassing those of the neo-locks which is highly unusual.”
Avance Gas chief executive Oystein Kalleklev told an earnings call today that congestion was normal in the fourth quarter. But it would start earlier in the year and last longer driven by El Niño weather and trade on bigger containerships between China and America. “We do see this happening more or less every season,” he said.
Kalleklev added that when the canal was expanded for bigger boxships, no one anticipated America would become the world’s biggest LNG and LPG exporter, which created further traffic.
“Panama clogging is here to stay,” he said.
Source: Lloyd's List