Tankers to stop transiting the Panama Canal amid drought
With the Panama Canal implementing sharp cuts in the number of booking slots for transits in the coming months tankers are set to be squeezed out of using the key waterway.
The Economics of Geography

Tankers to stop transiting the Panama Canal amid drought

Photo: AFP/Luis Acosta
Eurasia 07/11/2023 07:00

With the Panama Canal implementing sharp cuts in the number of booking slots for transits in the coming months tankers are set to be squeezed out of using the key waterway.

Oil tankers were relatively minor participants in the canal’s transit numbers but this could drop to zero as the Panama Canal cut booking slots to 25 daily from 3 November and will gradually reduce the number of booking slots to just 18 by 1 February 2024, in the worst drought in 73 years.

The Neo-Panamax locks that came into operation in 2016 are largely dominated by containerships and gas carriers in terms of transits.
AFP/Luis Acosta
“The tankers that use the Neo-Panamax locks are Suezmax and Aframax tankers.  Many of these large tankers are in ballast, with owners using the Canal to reposition their vessels in the US Gulf after discharging on the US West Coast,” according to Seatrade Maritime News.

The report noted that few Suezmaxes pass through the canal laden as current draught restrictions mean they can only carry around 12,000 tonnes of cargo more than an Aframax.

“Large oil tankers will not feature in this trade anymore.  They will not be able to schedule in advance like container ships do and they can likely not compete for the auction slots,” the report stated. Bids for additional auction slots have skyrocketed in recent months with a new high winning bid of $2.85 million.

Unlike containerships operating on fixed schedules tramp vessels will eschew transiting the waterway.

The stark reduction in slots will push many of the tramp vessels (including tankers and dry cargo ships) away from the Canal.  This will lead to more ton mile demand and possibly changes in segment utilization as longer hauls may stimulate the use of larger vessels.

#Panama Canal
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