Commodities and Futures News

Exclusive – Panama Canal does not plan transit restrictions at least until April

2024.02.07 13:29

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© Reuters. FILE PHOTO: Ships are pictured at the Panama Canal in Agua Clara, on the outskirts of Colon City, Panama, January 19, 2024. REUTERS/Roberto Cisneros/File Photo

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By Elida Moreno

PANAMA CITY (Reuters) – The Panama Canal sees no want for additional vessel transit restrictions until at least April, when its authority will consider water ranges at the tip of the dry season, Deputy Administrator Ilya Espino instructed Reuters.

A extreme drought final yr pressured the canal to scale back the variety of vessels allowed to cross per day. In December, rains within the final quarter of the yr allowed the waterway to droop additional restrictions that might have been utilized in January.

In latest months, assaults to ships at the Red Sea have prompted many vessel house owners to take longer routes to and from Asia, growing demand for transit by Panama, Espino stated.

“At least until April, we will maintain 24” approved transits per day, she stated in an interview late on Tuesday.

If rains arrive in May as anticipated, the canal plans to progressively improve day by day slots, aiming to return to about 36 vessels per day, its regular quantity in the course of the wet season. If rains are in need of expectations, the authority may apply additional restrictions to both day by day passage or draft, a vessel’s most depth.

“If rainfall does not begin in May, we would evaluate again whether to cut transit by one or two vessels per day, or to reduce maximum vessel draft to 43 feet,” she added. The authority can be monitoring evaporation at water reservoirs in the course of the dry season.

The canal at the moment permits vessels with a most draft of 44 toes. The Panama Canal Authority has averted slicing that quantity as a result of it will pressure many ships to scale back their hundreds, making transport of some merchandise unprofitable.

Container ships have precedence to cross by Panama, however the transit restrictions since final yr have hit different classes, particularly bulk carriers.

The have to protect water ranges at reservoirs feeding the canal has stopped it from absorbing incremental demand rising from the Red Sea, the place the assaults have hindered ships making an attempt to cross by the Suez Canal, the world’s busiest waterway, Espino stated.

“Due to problems at the Red Sea, many people forced to take alternative routes have tried to resort to Panama, but it has not been possible,” she stated, including bulk carriers have been hit hardest.

Espino stated elevated demand for U.S. liquefied (LNG) in Europe has diminished the necessity for LNG vessels to cross by Panama since 2022, however that state of affairs may change if U.S. exporters have value incentives to ship to Asia.

Due to the transit restrictions, the Panama Canal Authority has forecast a discount of as much as $700 million in toll revenues for the present fiscal yr ending in September. In 2024, the canal may miss a complete 1,500 vessels that might cross by in regular situations, Espino stated.

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