Data from Panama Canal agent Boyd Steamship shows that very large gas carrier (VLGC) auction fees for transit at the Panama Canal’s Neopanamax Locks are on the rise. This increase can be attributed to the growing waiting times experienced by vessels on both sides of the lock.
Extended Waiting Periods
On August 8th, delays for vessels transiting southbound through the Neopanamax Locks reached 20 days, marking the highest level recorded since December 1, 2022. Similarly, waiting times for northbound trips rose to 16 days on the same date, the highest since March 9th.
Over the past week, waiting periods have continued to extend. In August, northbound transit times have averaged around 12 days, compared to nine days in the same period last year and 11 days in the first week of July. Similarly, southbound transit times have also increased, averaging over 16 days in August, as opposed to just under eight days in the first week of July.
Impact on Shippers
These prolonged waiting times have created uncertainty surrounding estimated arrival dates for shippers of liquefied petroleum gas (LPG) along the U.S. Gulf to East Asia route.
Soaring Auction Prices
Delays at the Panama Canal have triggered a significant rise in auction prices for the daily Neopanamax transit slots. In August alone, LPG tanker transit fees have averaged around $373,400 compared to a base cost of $93,500. The fees for LPG transit at the Neopanamax Locks averaged around $283,600 in July, up from $236,300 in June.
The increasing waiting times and auction fees at the Panama Canal’s Neopanamax Locks have become a cause for concern. Shippers, especially those transporting liquefied petroleum gas, are grappling with uncertainties in their delivery schedules. The industry will need to closely monitor these trends as they continue to develop.
Impact of Low Water Levels on Draft Restrictions and Congestion
The decrease in water levels at Gatun Lake has resulted in draft restrictions, leading to an increase in congestion. These conditions are expected to persist until mid-September, as reported by a shipbroker based in London.
Steady VLGC Freight Rates Despite Congestion
Despite the growing congestion at the canal, Very Large Gas Carrier (VLGC) freight rates originating from the U.S. Gulf have remained relatively stable since the beginning of the month. On August 8, the OPIS-assessed Houston-Chiba VLGC rate stood at $165.50/metric ton, a slight decrease from $166/mt on August 1. This can be attributed to a lack of vessel demand and a significant backlog of shipments from the west of the Suez basin, according to the shipbroker.
Reporting by Jamie Aldridge; Editing by Rob Sheridan