The Panama Canal is benefiting from the Middle East crisis
Panama Canal is experiencing a notable revival since Middle East tensions and the blockade of the Strait of Hormuz. In particular, tankers carrying US oil and lng bound for Asia are increasingly opting for the route via Panama.
The growth in traffic is causing congestion at the canal. According to figures from the canal authority, the number of tankers increased by 60-70 per cent in April compared to previous months.
Panama Canal sees explosive growth in tanker traffic
Rising tensions around the Strait of Hormuz are causing energy companies to seek alternative routes for their shipments. As a result, the strategic role of the Panama Canal is again growing rapidly.
On some days, up to 50 ships reported at the canal entrances at the same time, while the normal capacity is around 36 ships per day.
To cope with the crowds, capacity was temporarily increased. Still, it remains pressing for ships wanting to pass through the canal quickly.
Did you know that...
...the Panama Canal is one of the most important links between the Atlantic and Pacific Oceans and remains crucial for global energy flows?
Panama Canal earns from auction prices
Much of the capacity is reserved in advance, but the remaining passages are auctioned. That is precisely where prices have risen sharply since the Middle East crisis.
Where previously shipowners paid an average of $135,000 for right of way, the amounts rose to an average of $385,000 per vessel in April. In May, this rose further.
In exceptional cases, even amounts of USD 4 million were paid to be allowed to pass through the canal faster. According to the canal authority, this involved a very exceptional situation where a tanker had huge time constraints.
Panama Canal becomes more strategically important
The developments show how quickly global trade routes can shift when geopolitical tensions rise. The Panama Canal is currently benefiting from the problems around the Strait of Hormuz.
For the logistics sector, this means that alternative routes are becoming increasingly important. Capacity, transit times and costs are constantly changing as a result.
Read more about international container and energy flows on the ocean freight page.
As long as the situation in the Middle East remains uncertain, the Panama Canal looks set to remain an important diversion route for energy and container transport.
