Lengthening Panama Canal transit delays have pressured Medium-Range (MR) tanker rates to record highs, prompting shipowners to remain in the US Gulf coast market and gain leverage in deals for Pacific-bound voyages that involve spiraling costs to transit the canal.
Auctions to skip the lengthy queues to transit the drought-stricken canal for MR tankers were at $1.1mn on Monday, and were as high as $1.6mn on 23 November, according to a shipbroker.
Charterers pay for the laden voyage auction costs separately from the lump sum typically paid on the routes transiting southbound via the Panama Canal. But shipowners will need to foot that same bill to head back northbound if they want to bypass the weeks-long wait into the US Gulf coast, which is factoring into higher lump sum payments on these routes and "increasing day by day," according to a shipbroking contact.
"The ballast leg is going to be very expensive, and you never know when you're going to transit," the contact said. "You need to win the auction, so if you fall short, you need to wait a few more days to pay even more."
The rate for a US Gulf coast-Chile voyage was at $4.6mn lump sum yesterday, the highest level ever recorded on the route. The lump sum expected by shipowners for the voyage has more than doubled from the $2mn paid on the same route on 19 October, the day before the Panama Canal Authority (ACP) announced the suspension of auctions through the end of the month before finally limiting the number of vessel transits daily in November through February 2024.
Rates for short-duration voyages that do not utilize the Panama Canal have also surged following the slew of additional restrictions rolled out by ACP in late October/early November, which slowed vessel replenishment back into the US Gulf coast via the Panama Canal. The rate for a US Gulf coast-Caribbean voyage was at $1.875mn yesterday, the highest since August 2022 and more than tripling from $555,000 on 19 October.
Panama Canal delays slow the return of MRs to the US Gulf
Recent bursts of demand in voyages to east coast Mexico and the Caribbean from the US Gulf coast have thinned vessel availability, while the bottleneck at the Panama Canal waiting to return to the Atlantic basin has slowed vessel replenishment, allowing rates to surge with shipowners firmly in the driver's seat of the market.
Wait times for MR tankers without a reservation to transit in either direction via the smaller Panamax locks hit their highest recorded levels alongside surging MR rates, with northbound and southbound vessels seeing delays as high as four weeks yesterday, according to Argus data. The significant backlog of vessels vying to access the Panamax locks, responsible for around 70pc of all traffic through the Panama Canal, prompted the ACP last week to begin special auctions available only to vessels that had waited longer than 10 days.
