The Panama Canal expansion will have a significant impact on the Suezmax tanker market as the larger Canal will diversify trade routes for the 1mn bl capacity tankers, an executive with shipping firm Diamond S said.
So far the effect on the Suezmax market has been minimal, however, as very few Suezmaxes are fitted with the necessary bollard arrangements for canal transit, Robin Heath, chartering manager at Diamond S said at the ASBA cargo conference in Miami yesterday.
The Panama Canal expansion was completed on 26 June.
In theory, the expansion allows Suezmax tankers to more quickly move crude from the Caribbean, the east coast of Mexico and the US Gulf coast to markets in Asia-Pacific. Moving from the Pacific to the Atlantic, the 1mn bl tankers could carry oil from Ecuador or west coast Mexico to buyers in the Atlantic basin.
Shipowners may also use the Panama Canal to their advantage. "Whether or not owners will suck up the costs [of transit] to get back to the Atlantic from the Far East or from the US west coast remains to be seen," said Heath.
The cost of a one-way laden Suezmax transit is about $400,000 and the cost of ballast is about $340,000, Heath said.
"It remains to be seen how traders adapt to this," he said. "Obviously, the biggest change would be speed of delivery, but not necessarily cheaper freight."
But the number of actual Suezmax ships suitable for passage through the canal is very limited, said Heath, because the positioning of the bollards on most of the ships in the global fleet precludes them from transiting.
Of Diamond S's fleet of ten Suezmaxes, only two — the ones delivered this year — are capable of going through the canal, said Heath. Two more Suezmax vessels that are scheduled for delivery to Diamond in the next couple of months will also be "Panama ready," he said.
Another reason for the lack of Suezmax movement through the canal is that because of very dry weather conditions in Panama "there is not enough water in the locks to allow fully laden Suezmaxes to transit," Heath said. The current draft is only 44ft, compared to the maximum of 50ft.
"We've seen very few Suezmaxes go through the Panama Canal since the opening of the new canal", Heath said.
The 2016-built Aegean Unity was the first ever Suezmax to transit the Panama Canal on 18 August. The ship took a partial crude cargo from the west coast of Panama to storage in the Bahamas.
