The first vessel was expected to make a transit today at the Panama Canal using a new, temporary special auction slot as the Panama Canal authority tries to assist with a queue that continues to grow for vessels without reservations. The Panama Canal Authority highlights that it is taking steps while there is no near-term solution and they continue to plan a phased reduction in the number of daily transits.
Nearly a month after warning that the Panama Canal would begin a stepping down daily transit to just a total of 18 per day in 2024, the wait times continue to grow at both sides of the canal. The authority said in a recent update that dry bulk and LNG are the segments that have been most affected by the limited transits. Containerships they report have been better able to handle the restrictions. They note that 70 percent of containerships transiting the waterway are able to proceed with the 44-foot draft limitation.
The reservation system continues to function with the authority highlighting that vessels often arrive early and wait for their booked slot. There are a total of 55 vessels with booked slots, including 18 for the Neopanamax locks, waiting as of midday on November 27. Vessels are generally waiting one to three days although there are some booked Neopanamax vessels waiting eight and nine days and while the circumstances are unclear one vessel is reported to be waiting 16 days.
The challenge however is with vessels that do not have advance reservations. That number has skyrocketed to 72 currently waiting up from around 60 at the beginning of the month. The largest portion is what they call supers, vessels with a bream greater than 91 feet. The average wait time is just under 10 days now up from around three days at the beginning of November. Data posted on the canal’s online system currently shows supers waiting up to 23 days and the regular size vessels (bream less than 91 feet) up to 15 days.
Starting on November 25 for a transit today, November 27, the authority began offering an additional slot in the Panamax Locks for auction two days prior to the transit. This slot is being limited to supers and regular vessels that have been waiting for at least 10 days before the auction and do not have a booking slot. They report the initial bid will be $55,000 in addition to the normal tariff but November has already seen some carriers driving bids to new record levels to obtain a slot. At the beginning of November, the Panama Canal Authority confirmed that there was a $4 million bid for a slot, while Bloomberg calculated in November that shipping companies have paid a total of approximately $235 million above transit fees to obtain slots.
“The purpose of this measure,” the Canal Authority writes about the special auction, “is to provide a greater opportunity of obtaining a slot for vessels in the Panamax Locks that have been waiting in the transit queue for an extended period.”
They are also implementing additional modifications to the Transit Reservation system. They are limiting future bookings for containerships to just 14 days while also providing some greater flexibility for supers and Neopanamax vessels.
Furthermore, they however warned, “While the current water deficit persists in the Canal watershed, the Transit Reservation system is the only mechanism available to guarantee a transit date. Therefore, vessels without a reservation may experience indefinite delays.”
The Canal Authority continues to urge vessels to make reservations ahead of time. They note that the drought has continued with October being the driest month on record. They have taken steps to reuse water from one lock chamber to another, known as cross-filling, which they said is saving the equivalent of six daily transits. The authority is also using water-saving basins in the Neopanamax locks.
When possible, they have also begun tandem lockages where two ships transit at the same time occupying one chamber. In the Panamax Locks, when possible due to shorter length vessels, they are also able to do a shorter chamber lockage.
Despite these steps, they still anticipate continuing to step down the number of daily transits to reach 18 in early 2024, down from 32 daily transits in October. They however highlight that this is permitting them to maintain the 44-foot draft level for the Neopanamax Locks and a non-restricted 39 feet at the Panamax Locks.
The situation however remains volatile with the Panama Canal Authority warning that even these steps depend on the level of Gatun Lake and rainfall projections for the upcoming weeks.