Panama Canal fees surge; container ship shells out $4 million to jump queue
&imwidth=600&imheight=450&format=webp&quality=medium "Panama Canal fees surge; container ship shells out $4 million to jump queue")
Prices for travelling through the Panama Canal’s busiest shipping lanes have hit record highs Photograph: (AFP)
Ships are now waiting about 10 days for their turn to pass through the trade route linking the Pacific and Atlantic oceans. The route is favoured by shippers, as it usually reduces cost and transit times, especially for large retailers and energy companies that trade between Asia and the US.
Commercial ships travelling through the Panama Canal are facing a surge in costs as they seek alternative routes because of maritime travel disruption due to the Iran war and falling water levels linked to the intense El Niño weather system.
As per reports, a container ship paid $4 million to skip the queue at the Panama Canal, where wait times are now stretching more than a week to pass through the vital maritime choke point.
The near-record high auction figure was reportedly paid by the owner of the vessel, the Seaspan Benefactor. The owner could not be identified because the auction data is private.
Ships are now waiting about 10 days for their turn to pass through the trade route linking the Pacific and Atlantic oceans. The route is favoured by shippers, as it usually reduces cost and transit times, especially for large retailers and energy companies that trade between Asia and the US.
Panama Canal Authority runs daily auctions for shipowners
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While shipping companies pay a flat fee to reserve a slot for transit through the canal, the Panama Canal Authority also runs daily auctions that allow shipowners to place bids to skip the queue.
Starting bids open at about $15,000 for smaller cargo vessels and $55,000 for the largest ships, but these prices can shoot up during times of heavy congestion or high demand.
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The $4 million transit fee was paid for Seaspan Benefactor, a 10,100 TEU (20-foot equivalent unit) vessel.
Shipowners are willing to pay significantly higher prices at auction to avoid queues, as more vessels stay away from the Gulf and the Red Sea.
The military conflict in the Middle East has effectively closed the Strait of Hormuz and the Bab al-Mandab, the narrow waterway between the Arabian Peninsula and the Horn of Africa.
Falling water levels amid El Niño a big concern
Prices for travelling through the Panama Canal’s busiest shipping lanes have hit record highs at a time when water levels are falling amid the rapidly developing El Niño weather system.
The Panama Canal Authority has said that it would impose limits in late August and early September on how low vessels can travel through the water, known as a ship’s draft, in an effort to keep traffic flowing.
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The Panama Canal is not the only crucial trade route affected by low water levels, amid growing international concern over the economic consequences of the climate emergency.
Prolonged dry weather across Europe has led to record low water levels in the Rhine, with traders warning that it was not possible to book some cargo shipments on the river, forcing them to pay higher costs to transport goods by road and rail instead.
The Rhine is one of Europe’s main arteries for transporting grain, fuel, minerals, and goods.
