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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