11 July (Lloyd's List) - THE POST-DROUGHT recovery of Panama Canal traffic is accelerating as water levels continue to rise.
The rebound is essentially complete for neopanamax containerships. Very large gas carrier transits are moving much closer to normal. Dry bulk carriers — a key segment for the panamax locks — are on the upswing but still down due to seasonal factors.
There was an average of 28.97 transits per day through both locks in June, up 11.6% versus May, according to Panama Canal Authority (ACP) data* released Wednesday.
The panamax locks led the gains, with an average of 20.8 transits per day in June, up 12.9% month on month. The neopanamax locks averaged 8.17 transits per day last month, up 8.2% sequentially.
The ACP has been steadily increasing the number of daily reservations slots in recent months, but the real metric is actual transits, not available slots.
This data confirms the improvement — average transits per day are up 27.9% from their nadir in January — but it also highlights the continued shortfall.
June’s average transits per day were still down 20.3% from the same month in 2022, prior to the effects of the drought.
Neopanamax locks: Containerships normalise, VLGCs continue to rise
Drought restrictions began heavily impacting neopanamax transits in November 2023.
These locks handled 245 ships in June, up 29.6% from the low in January but still 19.9% below the pre-transit-restriction traffic in October.
The neopanamax locks are particularly important to Asia-US containerised trade, all the more so given attacks in the Red Sea forcing liner reroutings around the Cape of Good Hope.
The good news: There were 162 transits by neopanamax containerships in June, essentially the same as in October (when there were 164). Monthly transits of larger containerships have jumped 37.3% since their January low.
The neopanamax locks system is also important to spot rates for VLGCs in the liquefied petroleum gas market. Transit restrictions have forced VLGCs to take the much-longer Cape of Good Hope route on their backhauls to the US Gulf.
There were 72 VLGC transits in June, up 12.5% month on month and 56.5% versus the low hit in December. VLGC transits are still 15.3% below October levels, but getting closer.
All of the recent progress in the neopanamax locks is centred on containerships in VLGCs. Virtually all of the remaining declines versus pre-transit-restriction levels relate to liquefied natural gas carriers and segments that primarily use the panamax locks (dry bulk, ro-ros, tankers, passenger ships).
There were five LNG carrier transits in June versus 24 in October. LNG ships transporting cargoes from the US Gulf to Asia continue to use the Cape of Good Hope for both laden and ballast voyages.
Panamax locks: Most segments recover, dry bulk lags due to seasonal factors
The panamax locks handled 624 ships in June, up 35.4% from the low in February and 10.3% below the pre-transit-restriction traffic level in October.
The two heaviest users of the older panamax locks are chemical tankers and dry bulk carriers. There were 167 chemical tanker transits in June, up 10.6% month on month, up 53.2% versus their low in February, and flat (one transit higher) versus October.
Panamax dry bulk transits came in at 113 in June, up 20.2% month on month to more than double their February low, albeit still down 31.1% versus October.
Most of the remaining decline in panamax locks traffic versus October levels is due to bulkers. Excluding bulkers, Panamax transits in June were down only 3.9% compared to October.
The June decline in bulker transits versus October involves seasonal factors. Grain cargoes from the US Gulf to Asia traditionally surge in October-December. Last year, starting in November, shippers were forced to take the longer Red Sea route instead of the Panama route, after which they were diverted a second time to the Cape of Good Hope by Houthi attacks in the Red Sea.
Analysts expect grain cargoes loaded on panamaxes in the US Gulf to once again route via the Panama Canal in this autumn’s export season. That would weigh on panamax spot rates (by reducing tonne-miles) and bolster overall transits via the panamax locks.
Smaller containerships, ro-ros and LPG carriers are the third, fourth and fifth most important sources of panamax locks traffic.
Panamax containership transits were up 19.4% month-on-month and 22.9% versus their March low but were still down 9.5% versus October.
Ro-ro and smaller LPG carrier transits have actually increased over the past eight months. Ro-ro transits are up 18% versus October, with smaller LPG carrier transits up 14.5%.
That said, comparisons to October, prior to the latest round of transit restrictions, are less relevant to the panamax locks than the neopanamax locks. Transits-per-day data shows that traffic via the panamax locks began declining back in 2Q23, so there is a longer path to recovery.
Gatun Lake water level continues to rise
The ultimate full recovery of Panama Canal traffic depends upon the weather – and Mother Nature is cooperating.
According to the ACP, the water level of the Gatun Lake was at 83.61 ft (25.48 m) as of Thursday. This is almost a half-metre higher than the ACP had forecast a month ago.
The water level is now up 1.05 m from the recent low on April 23, and 1.33 m above the drought floor reached on July 25, 2023.
Nevertheless, there is still a sizeable gap between the current level and the circa-2022 “normal”. Thursday’s water level was still down 1.13 m from the same day in 2022.
* The ACP does not release monthly transit statistics by segment or statistics on total monthly transits. It releases fiscal-year-to-date transits by segment and fiscal-year-to-date total transits since October, the beginning of its fiscal year. Lloyd’s List calculates monthly transits by comparing each month’s cumulative fiscal-year-to-date statistics, and derives transits per day from this data.
