Tankers unlikely to benefit when Panama Canal raises daily transits next month

The Panama Canal Authority (ACP) will increase daily transit slots to 24 from 16 January after a slight increase in rainfall in the area.

PHOTO: The Port of Balboa at Panama's Pacific Ocean side. Getty Images

The new guidelines will replace ACP’s previous communication that limited daily transit slots to 20 in January and 18 in February. The easing of transit restrictions could also have been influenced by a decline in canal revenue from lower voyages, a trading source said.

Water levels in the canal have dropped to record lows after a severe drought in the region. As a result, ACP has been slashing daily transit slots since August, and currently, only 22 vessels are allowed to transit daily through the canal’s six neopanamax and 16 panamax locks.

Traffic in the Panama Canal has been declining due to the drought restrictions, with some tankers taking alternative routes, such as South Africa's Cape of Good Hope or Egypt's Suez Canal.

However, the Suez Canal is also facing difficulties as commercial sea traffic in the southern Red Sea has been targeted by the Houthis in Yemen.

The increase of two Panama Canal transit slots from current levels will not make “much difference at all," a source said. The additional slots are likely to be absorbed by natural gas carriers and other high-value cargoes, which could leave oil tankers priced out, the source added.

Tankers have lower priority in the Panama Canal as their combined cargo volumes can be much smaller in comparison to other vessel classes.

The ACP has in recent months decreased the maximum draft in its larger locks and reduced the number of vessels allowed to transit by almost half. The 24 transit slots allowed from 16 January will still be far lower than the original transit capacity of 36 slots at the beginning of the year.

ACP’s official figures show that the number of vessels transiting the canal decreased to 783 in November, compared to 1,003 in October. It was also a significant drop from the 1,091 vessels that transited the canal a year earlier in November 2022.

By Debarati Bhattacharjee

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