Seasonal traffic lifts Panama Canal delays

Wait times for vessels to transit the Panama Canal's Neopanamax locks have risen sharply since the start of October because of a seasonal increase in LNG tanker and containership traffic that typically occurs ahead of winter in the Northern hemisphere.

Since 4 October, the wait time for a vessel without a reservation to transit the canal's Neopanamax locks has risen by 20 days to 23 for northbound transit and by 12 days to 14 for southbound transit. Over the same period, the number of vessels waiting to transit the Neopanamax locks has jumped to 46 from 19, according to the Panama Canal Authority (ACP).

The higher wait times have put significant upward pressure on prices for the two daily auctioned Neopanamax transit slots. So far this month, three LPG tankers have paid roughly $2mn for an auctioned slot, according to a shipping agent, compared with the base cost of $93,500 for a slot.

Freight rates for very large gas carrier (VLGC) shipments out of the US Gulf coast have received significant upward pressure from the delays, which have exacerbated vessel supply tightness in the region. Since 26 October, the Houston-Flushing VLGC rate has surged by 44pc to $199/t, the highest since 31 December 2020.

At 12pm ET, 14 VLGCs were waiting to transit northbound through the canal, while seven VLGCs (all laden) were waiting to transit southbound, according to Vortexa data. When wait times are at average levels, VLGC queues are typically three vessels or fewer.

In addition to increased seasonal traffic, the ACP also attributed the higher wait times to recent persistent fog, which has limited the canal's ability to safely transit vessels.

Last year, Neopanamax lock wait times peaked at around 18 days for both directions in mid-November before falling sharply toward the end of the month to more typical levels of around five days.

By Michael Connolly