Turbulence across global trade routes shows no sign of slowing down, as following the crisis in the Strait of Hormuz, a new challenge threatens international commerce: El Niño poses a major threat to operations at the Panama Canal. Surging demand for limited transit slots, combined with an impending reduction in daily vessel crossings, has sent priority costs soaring, with a gas carrier paying a record $5.3 million for a priority slot.
Record payment for priority
A vessel carrying liquefied petroleum gas paid a record-breaking $5.3 million to accelerate its passage through the Panama Canal, after the waterway's authority announced it will reduce daily crossings starting next week due to the El Niño phenomenon, Administrator Ilya Espino de Marotta stated yesterday, Thursday. "We have conducted three rather high auctions recently," noted Ilya Espino de Marotta, confirming that this marks "the highest amount" ever paid to date. According to Bloomberg, South Korean firm SK Gas agreed to pay this sum during an auction so that its vessel, the G. Spirit, could secure priority transit through the Panama Canal on September 1.
Costs skyrocket due to water scarcity
The Canal relies heavily on rainwater stored in the artificial lakes Gatun and Alajuela, where water levels have dropped significantly due to the impact of climate conditions. The Panama Canal Authority (ACP) announced last week that effective September 3, daily ship transits will be reduced from 36 to 34 vessels, dropping further to 32 daily transits starting September 15 to manage maritime traffic. Roughly 5% of all global maritime commerce moves through this 80-kilometer shipping route.
Priority slots put up for auction
Nine out of ten transits through the Canal are scheduled via advance reservation, while remaining slots or schedule changes caused by unforeseen delays are sold off through auction systems. Back in April, a vessel paid up to $4 million in a similar auction to expedite a hydrocarbon delivery following supply disruptions caused by the blockade of the Strait of Hormuz.
"The market determines the prices"
The auctions are "driven strictly by market forces," Ilya Espino de Marotta told Agence France-Presse. "The Canal sets a base starting price, and whichever vessel has the most urgent need to secure a transit permit bids the price up," she explained. The ACP noted in a statement that the average auction price between October 2025 and February 2026 hovered around $55,000, a figure that has since tripled as shipping delays mount.
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