Panama Canal delays persist following maintenance

Prolonged wait times have persisted at the Panama Canal following the 17 July completion of maintenance on the east lane of the Canal's Gatun locks.

The maintenance, which began on 4 July and was originally scheduled to be completed on 14 July, was twice extended because of unexpected delays, the Panama Canal Authority (ACP) said.

From 16-19 July wait times for unbooked vessels transiting the Canal's Neopanamax locks rose to nine days from six for northbound transit and to nine days from seven for southbound transit, according to Argus assessments. Reports from the ACP today indicate that Neopanamax wait times have risen further to 10 days for both northbound and southbound transit.

During the same time, wait times for unbooked vessels transiting the Panamax locks have fallen to nine days from 11 for northbound transit and to 10 days from 12 for southbound transit, according to Argus assessments. Reports from the ACP indicate that those wait times are unchanged today. At the beginning of July, both wait times were two days, according to Argus assessments.

The persistent above-average wait times have led to congestion for clean tankers and LPG tankers at the Canal, which has provided upward pressure to freight rates in the US Gulf coast by limiting available tonnage in the region. Since 16 July, the Canal's vessel backlog has fallen by just 11 to 114, according to the ACP.

As of 3pm ET, 13 medium range (MR) clean tankers, which transit the Panamax locks, were waiting near the Canal's northern entrance, and 11 MR tankers were waiting near the southern entrance, according to Vortexa. At the same time, 11 LPG tankers, including nine very large gas carriers (VLGCs), which transit the Neopanamax locks, were waiting near the Canal's northern entrance, and six LPG tankers, including four VLGCs, were waiting near the southern entrance.

The congestion has not been enough to lift MR tanker rates in the US Gulf coast, which have fallen since early July amid continued low demand, but it has helped support the rate floor. Since 6 July, the US Gulf coast-Europe MR tanker rate has fallen by 12pc to WS75, according to Argus assessments.

Conversely, LPG rates have risen amid the increased Panama Canal wait times. Since 6 July, the Houston-Chiba VLGC freight rate has risen by 9pc to $77/metric tonne, according to Argus assessments.

By Michael Connolly