Panama Canal transit restrictions due to drought and high tariffs are forcing shippers of US grain from the Persian Gulf Coast to Asia to take longer routes, with higher shipping costs, to avoid one of the main maritime trade routes in the world, Reuters reported, citing traders and industry analysts.
The higher costs come during peak U.S. corn and soybean supplies. Ships carrying these crops face excruciating waits of up to three weeks to pass through the canal as container ships and others sailing on more regular schedules grab the few available transit slots.
Due to the unprecedentedly low levels of Lake Gatun, the Panama Canal Authority (PCA) is limiting the number of daily transit ships as severe drought has reduced the flow of water needed to operate the lock system. The PCA limits daily transits to 22 per day in December, to 20 in January and only 18 for February. Under normal conditions, the permitted number is up to 35 transits per day.
Restrictions may continue to hamper grain supplies into the second half of 2024, analysts said.
Options for grain exporters include sailing south around South America or Africa or using the Suez Canal. However, these longer routes can add up to two weeks to delivery schedules, raising fuel, crew and freight leasing costs.
In the second half of October, only five Gulf grain ships bound for East Asia passed through the Panama Canal, while another 33 sailed east to use the Suez Canal, the US Department of Agriculture (USDA) said in a report. . During the same period a year ago, 34 ships used the Panama Canal, while only 7 used Suez.
56.8 percent of all U.S. corn exports in October went through Gulf Coast ports this year, down from 64.9 percent in October 2022 and 72.1 percent in October 2021, according to USDA data.
The higher costs come during peak U.S. corn and soybean supplies. Ships carrying these crops face excruciating waits of up to three weeks to pass through the canal as container ships and others sailing on more regular schedules grab the few available transit slots.
Due to the unprecedentedly low levels of Lake Gatun, the Panama Canal Authority (PCA) is limiting the number of daily transit ships as severe drought has reduced the flow of water needed to operate the lock system. The PCA limits daily transits to 22 per day in December, to 20 in January and only 18 for February. Under normal conditions, the permitted number is up to 35 transits per day.
Restrictions may continue to hamper grain supplies into the second half of 2024, analysts said.
Options for grain exporters include sailing south around South America or Africa or using the Suez Canal. However, these longer routes can add up to two weeks to delivery schedules, raising fuel, crew and freight leasing costs.
In the second half of October, only five Gulf grain ships bound for East Asia passed through the Panama Canal, while another 33 sailed east to use the Suez Canal, the US Department of Agriculture (USDA) said in a report. . During the same period a year ago, 34 ships used the Panama Canal, while only 7 used Suez.
56.8 percent of all U.S. corn exports in October went through Gulf Coast ports this year, down from 64.9 percent in October 2022 and 72.1 percent in October 2021, according to USDA data.
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