Cost to Jump Panama Canal Line Becomes Much Cheaper

By Ruth Liao

(Bloomberg) - The cost for shippers to bypass congestion at the Panama Canal has significantly decreased from record highs in recent months, as the number of vessels waiting to cross has decreased and tankers are choosing alternative routes.

The Panama Canal has reduced its daily transit slots to one-third of its normal capacity due to ongoing drought conditions exacerbated by El Niño. The lack of freshwater required to operate the canal has become a threat to the country's drinking water supply, and the dry conditions are expected to continue until the start of the rainy season in May or June.

As of January 11, the average auction price for Neopanamax slots, which allow the largest tankers to transit the canal, was $269,000, according to a spokesperson from the Panama Canal Authority. This class also includes vessels carrying liquefied natural gas.

Panama-based Francisco Torné from the shipping agency Waypoint Port Services mentioned that the final auction prices were lowered due to the low number of bidders for the Neopanamax slots.

Canal slots were auctioned off for as high as nearly $4 million in November. The decreased demand for these slots is a result of vessels diverting away from the Panama Canal and opting to use alternative routes. The escalating security concerns around the Red Sea and Suez Canal have also contributed to global shipping disruptions.

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