Shipping firms are forced to pay record sums for fast passage through a backlog of ships waiting to traverse the Panama Canal.
A drought exacerbated this situation.
A company recently paid US$2.4 million, plus a $400,000 standard fee, for expedited vessel passage, reported Avance Gas Holding Ltd.
The ship queue has grown due to drought-induced water scarcity in canal locks.
The shortage reduces transiting ships and cargo, causing delays in a canal handling over 500 million tons of cargo yearly.
To avoid waiting, the Panama Canal Authority conducts auctions.
Skipping the line is immensely costly, noted Oystein Kalleklev, Avance Gas CEO. With the regular fee, the total cost is nearly US$3 million.
As per Bloomberg-accessed auction data, the record fee allowed a liquified petroleum gas tanker to pass.
The Panama Canal Authority did not comment immediately.
Water scarcity has led to fewer transiting vessels and cargo, increasing delays.
The Panama Canal Authority holds auctions for those wishing to avoid waiting, but the cost, nearly US$3 million with the regular fee, is significant.
The record fee expedited a gas tanker’s passage, marking a cost peak for shipping companies navigating the key waterway amidst environmental challenges.
RESTRICTIONS
Due to water scarcity, the Panama Canal will maintain shipping restrictions for a year, causing congestion in the major trade route.
The Canal, which facilitates 6% of global maritime trade and stretches 80 kilometers, connects the Pacific Ocean and the Caribbean Sea.
Major users include the US, China, and Japan. The reduced rainfall, influenced by climate change and El Niño, led the Canal to limit transits since July 30 to conserve water.
Previously, about 40 ships crossed daily, but the number has been reduced to 32.
The Canal authority has also decreased the vessel’s draft limit to 44 feet, down by two feet from before.
With information from Bloomberg Linea