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Market Matters Blog 04/22 11:11
Panama Canal Increasing Booking Slots Beginning Mid-May 2024
It's been a struggle for ships trying to move through the Panama Canal since
early 2023 due to low water issues from drought. Some good news came on April
15 when the Panama Canal Authority announced an increase in booking slots in
the Panamax locks beginning May 16, 2024.
Mary Kennedy
DTN Basis Analyst
It's been a struggle for ships trying to move through the Panama Canal since
early 2023 due to low water issues from drought. Transit times were long and
many shipping companies searched for other ways to move their products. While
other routes proved costly, the long delays at the Panama Canal were even more
costly.
Some good news came on April 15 when the Panama Canal Authority (ACP)
announced in an Advisory to Shipping stating: "Based on the present and
projected level of Gatun Lake, the Panama Canal Authority announces an increase
in booking slots in the Panamax locks beginning May 16, 2024. In addition,
effective June 1, 2024, an additional slot will become available in the
Neopanamax locks."
According to ACP, scheduled maintenance work at the Gatun Locks, set to take
place from May 7-15, will necessitate a temporary reduction in daily transits
from 20 to 17 at the Panamax locks. However, the canal will implement
significant increases in transit capacity thereafter, raising the total number
of daily transits from 24 to 31 from May 16-31 and then beginning June 1, the
total will be 32. The increases come from transit through the Panamax locks
rising from 17 to 24 effective May 16-31 and starting June 1, transit through
the Neopanamax locks will increase from seven to eight.
The decision to implement these measures follows extensive analysis and
monitoring of water resources, according to an April 16 press release.
The Panama Canal relies on an artificial lake, Gatun Lake, which is 85 feet
above sea level and fills the locks in the Panama Canal with fresh water to
raise vessels as they pass from the Pacific Ocean to the Atlantic Ocean. As of
April 21, 2023, the lake was at 80.2 feet, below the 85 feet needed to reach
the level of Gatun Lake, according to the ACP website. However, that level is
expected to increase as La Nina enters the weather picture.
In March 2024, there were 747 monthly transits, a 12.8% increase from
February (662 transits) and a 6% increase from January (702 transits). However,
year-to-year transit numbers are still considerably lower. The 747 transits in
March are 33% lower than the 1,113 transits in March 2023, according to ACP.
Mike Steenhoek, executive director of Soy Transportation Coalition, said in
an April 11 email to DTN, "Dry bulk vessels that accommodate soybeans, grain
and other commodities have been among the customer segments most impacted by
the transit restrictions since transit limits were instituted. Toll rates paid
by agricultural shippers ($200,000-$250,000) are modest compared to the
$750,000-$800,000 (or greater) tolls that container ships pay.
"As a result, the limited number of transit slots will be apportioned to
those customers who pay higher tolls and provide more revenue to the canal
throughout the year. Moreover, agricultural exports do not operate with the
same degree of departure and arrival precision that container vessels,
automobile carriers, cruise ships, etc. operate under. As a result, these other
vessel types are better able to schedule a transit slot far in advance compared
to agricultural exports."
Steenhoek added, "Agricultural exporters located in the Mississippi Gulf
region have had to resort to utilizing the Cape of Good Hope route along the
southern tip of Africa. The Suez Canal, unfortunately, is not a viable option
given the attacks on shipping by the Houthi rebels near the Bab el-Mandeb
Strait."
"Hope remains that the canal will be able to return to normal transit levels
of 38-40 by 2025. Vessel attacks in the Red Sea have diminished but still exist
and many ships are still routing around this danger," said Jay O'Neil, HJ
O'Neil Commodity Consulting, in his weekly transportation update.
April 15 ACP Advisory to Shipping notice:
https://pancanal.com/wp-content/uploads/2024/01/ADV12-2024-Increase-in-the-Numbe
r-of-Booking-Slots-and-Increase-in-the-Maximum-allowable-draft.28.pdf
April 16 ACP press release:
https://pancanal.com/en/panama-canal-announces-new-measures-regarding-number-of-
transits-and-maximum-draft/
My December 2023 update on the Canal:
https://www.dtnpf.com/agriculture/web/ag/columns/cash-market-moves/article/2023/
12/11/relief-panama-canal-water-levels
The International Research Institute for Climate and Society (IRI) published
its global and regional seasonal climate forecasts. Here is an April 18 blog by
Bryce Anderson, DTN ag meteorologist emeritus:
https://www.dtnpf.com/agriculture/web/ag/blogs/ag-weather-forum/blog-post/2024/0
4/18/iri-summer-forecast-points-western
Mary Kennedy can be reached at Mary.Kennedy@dtn.com.
Follow her on social platform X @MaryCKenn
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