Panama Canal under pressure: record fees for tanker passages

Dusseldorf. The situation at the Panama Canal, the bottleneck between the Atlantic and the Pacific, is more tense these days than it has been in years. On both sides of the canal, ships are currently waiting up to two weeks for a place in the locks, which are particularly in demand because of the effects of the Iran war. Asian countries are increasingly importing liquefied gas from the USA because deliveries from Qatar and the other Gulf states are failing.

In addition, there is the El Niño weather phenomenon, which could be particularly intense this year. In Panama, this is causing the water levels in Lago Gatún, the freshwater lake between the two oceans that the ships sail on, to drop significantly.

To prevent the lock operations from allowing too much fresh water to flow into the sea and threatening the state of the lake, the canal authority is reducing the number of passages per day from September. In addition, large ships can no longer sail through the canal fully loaded because the water level is not sufficient.

This was most recently necessary during a drought in 2023/24. But according to climate experts, this year's El Niño is likely to be significantly stronger and last well into 2027.

For shipping companies, this means one thing above all: prices are rising – to new records. The South Korean gas company SK Gas apparently had enough of waiting and recently paid a record sum for a guaranteed place in the locks of the Panama Canal. The 225-meter-long LPG tanker “G. Spirit” is scheduled to pass through the waterway on Tuesday, September 1st for $5.3 million, the Bloomberg news agency reports, citing informed sources.

As far as we know, no shipping company has ever paid more for a guaranteed time slot for this passage. The LPG tanker is currently on the Pacific side of the approximately 82 kilometer long canal system and, according to observers, is likely to load liquefied gas in the USA and bring it back to South Korea. SK Gas is one of the country's largest gas suppliers, which covered its gas imports almost entirely with imports from the Gulf region until the Strait of Hormuz was blocked.

The Koreans thus exceeded their own high mark of around 4.6 million dollars for the passage of another tanker, which was only a few weeks old. Before the start of the Iran War, the fees, which the canal authority in Panama sets partly through daily auctions, averaged $55,000.

According to reports in specialist media, ships in the “Neopanamax” size class are particularly affected: They are so large that they barely fit into the larger and more modern locks that have existed on the Panama Canal since 2016. The smaller “Panamax” ships therefore have shorter waiting times. Almost all liquid gas tankers belong to the larger class.

The spot prices, i.e. the current prices on the stock exchange, for liquid gas in Asia are currently as high as they were last in 2022. In addition to the traffic jam at the Panama Canal, this means that at least one gas tanker is currently using the route around Cape Horn at the southern tip of South America, which is almost never used by this type of ship, to load new gas on the Gulf of Mexico. The detour is around 15,000 kilometers long.