Growing Congestion at the Panama Canal
Growing congestion at the Panama Canal is pushing gas tankers to take unusual routes. Wait times have reached up to 19 days, the highest since 2022, according to Argus Media data. This congestion has led some vessels to make rare detours around South America or engage in ship-to-ship transfers off Balboa port.
In one case, two supertankers were seen transferring cargo to ensure a steady flow of liquefied petroleum gas (LPG) to Asian markets. This process allows one tanker to shuttle back and forth through the canal, avoiding lengthy delays. The French oil and gas company TotalEnergies chartered these supertankers, which include the Energia Grandeur and the Eneos Wisdom.
On September 1, a tanker carrying LPG paid a record $5.3 million for priority passage through the canal. This payment was made by South Korean company SK Gas ahead of expected restrictions related to the El Niño weather phenomenon. Panama declared an emergency due to severe drought conditions affecting water reserves critical for canal operations. Rainfall deficits have reached 60% on the Pacific side, with 11 watersheds experiencing water stress.
The Panama Canal Authority plans to reduce daily transits from 36 to 34 starting September 3. Further cuts to 32 are expected later in the month. These reductions come after the canal's operators previously lowered the daily transit number from 38 to 22 earlier this year due to low water levels.
Related coverage: Strait of Hormuz Traffic Increases Amid Ongoing Tensions.
The congestion at the Panama Canal is likely to increase shipping costs for liquefied petroleum gas, impacting prices in the energy sector. The reduced transit capacity could also lead to delays in deliveries, affecting supply chains that rely on this key waterway. Watch for further developments on transit restrictions as the El Niño conditions evolve.
Based on reporting by: businesstimes.com.sg, euronews.com