Panama Canal Backlog Easing
July 26, 2024
One of the few areas where global trade disruptions have eased recently was in Panama. Water levels in the Panama Canal slowly increased and transit restrictions were gradually lifted throughout the first half of 2024. The latest announcements by the Panama Canal Authority (APC) in June increased the number of daily booking slots for vessels transiting the Panama Canal to 34 in August, compared to the lowest level in 2024 at 24 in April.
Tracking by AIS data, MR2-sized oil tankers and VLGCs are among the most common ships that have transited through the Panama Canal. The reduction of daily transits from a normal operation level at 36 to 24 earlier this year has resulted in vessel rerouting through the Cape of Good Hope or Cape Horn and a change in trading patterns. A net impact was calculated at 21 MR2 and another 21 VLGC demand equivalent, which explained the jump in freight levels at the end of 2023/beginning 2024. With daily transits correcting upward close to normal, the upside support now merely exists. Following the latest announcement, the demand support is expected to retreat to only 4 MR2 and 3 VLGC demand equivalent, putting strong headwinds to both markets.
Figure 1: Daily Canal Transits Figure 2: Vessel Equivalent Demand
Source: McQuilling Services, AIS Tracking
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