Panama Canal Transit Plunge Raises Concerns For Global Shipping

The official data on Panama Canal transit for November recently made public presents a bleak image, raising worries that this may only be the start of a more significant decline.

According to the Panama Canal Authority, the total number of transits from October to November significantly decreased by 22%. The fact that this reduction affects both the more recent, larger Neopanamax locks installed in 2016 and the older, small-scale Panamax locks is especially concerning.

The Neopanamax locks are essential for moving high-capacity container ships from Asia to U.S. East and Gulf Coast ports. They also help carriers of LNG and Liquefied Petroleum Gas export goods from the U.S. Gulf to Asia.

Transits through the Neopanamax locks decreased by 28% in November compared to October, while transits through the Panamax locks fell by 19%. On the Neopanamax side, dry bulk shipping suffered the most at the Panamax locks, while LNG, LPG, and container ships also encountered difficulties.

The current season is critical for American farmers because it is usually characterised by a peak in grain exports from the U.S. Gulf to Asia through the Panama Canal. But this tradition has suffered with grain-laden bulkers switching to the Suez Canal.

There were 164 Panamax bulkers in transit in October, but by November, there were only 87—a shocking 47% decrease from the previous month.

Data from each month’s average daily transits through lock type shows how severe the November drop was compared to earlier months. In the first ten months of 2023, average daily transits by the Neopanamax locks increased by 4% compared to the same period in 2022; however, things took a drastic turn in November. From the 9.83 average daily transits in November 2022 to 7.37 average daily transits, a 25% decline was observed.

Reference: Freight Waves