Panama Canal cuts draft, auction fees hit record amid drought

The Panama Canal has reduced the maximum draft for Neopanamax locks to 48.5 feet (14.78 meters) as of August 15, the third in a series of five scheduled adjustments, in response to a strong El Niño that could last until 2027 Source: infobae. The canal authority says daily transits remain unchanged at 36–37, but the reduced draft forces ships to carry less cargo, raising costs for shippers Source: listindiario.

Record auction fees

Auction prices for transit slots have soared. A supertanker paid US$4.6 million to skip the queue, surpassing the nearly US$4 million paid earlier for a container ship Source: larepublicaco. Average auction prices for August reached US$1.1 million, more than 16 times last year's average, with individual slots hitting US$3.78 million for Neopanamax and US$2.63 million for Panamax Source: larepublicaco. Argus data shows some Neopanamax ships have waited up to 11 days for a slot Source: larepublicaco.

Causes and outlook

The drought stems from an intensifying El Niño, which has also disrupted European rivers Source: mileniomx. Additionally, the closure of the Strait of Hormuz due to the Iran conflict has pushed Asian buyers to increase US Gulf purchases, boosting demand for the canal Source: mileniomx. The canal plans to reduce draft to 44 feet (13.41 meters) by April–May 2027, the minimum for Neopanamax, but does not foresee transit restrictions Source: infobae. Lake Gatún levels are below historical averages and expected to drop further Source: mileniomx.

Disagreement

While the canal authority states no transit reductions are planned Source: infobae, Argus warns that lower water levels could reduce the number of transit slots later this year Source: mileniomx.