"Since the start of July, Panama Canal bulker transits have fallen 22% y/y. Bulkers have faced increased competition for transit slots from other sectors, especially tankers, as the US has boosted energy exports to Asia. El Niño is also expected to lead to lower water levels, which mean transit restrictions and thus heightened competition for available capacity,” says Filipe Gouveia, Shipping Analysis Manager at BIMCO.
The canal is commonly used on trade routes between the east and west coasts of the Americas, as well as some routes between the Americas and East Asia or Europe. It is particularly important for the US, which is the origin or destination of 54% of dry bulk cargoes transported through the waterway. Grains, steel, fertilisers, coal, salt and petcoke are the main dry bulk commodities transported via the canal. These commodities are transported primarily by supramax, handysize and panamax ships.
“The decline in bulker Panama Canal transits has resulted in rerouting via the Cape of Good Hope or Cape Horn. The diversions increase average sailing distances and boost tonne mile demand. During the previous El Niño in 2023-24, when bulker transits decreased significantly, rerouting increased global dry bulk tonne-mile demand by around 1%,” says Gouveia.
The Panama Canal Authority has introduced a series of restrictions to preserve water amid expectations of lower levels in Gatun Lake. The maximum ship draught in neopanamax locks has been lowered gradually from 15.2 m (50 ft) to 14.3 m (48 ft) since July. The number of daily transits was reduced from 36 to 34 ships on 4 September and again to 32 ships on 15 September. Looking ahead, a plan submitted to Panama's parliament proposes an average of 29.5 daily transits in October.
The draft restrictions have had limited direct impact on the dry bulk sector as most bulkers transit the panamax locks rather than the neopanamax locks. The restrictions have mainly affected a small number of capesize vessels transporting coal from Colombia to Mexico.
“However, the transit restrictions will increasingly impact the dry bulk sector going forward. The export season for US maize and soya beans is about to peak and around 15% of US seaborne maize and soya bean exports normally transit the Panama Canal on their way to East Asia and the west coast of the Americas. As competition for limited transit slots increase, bulkers are increasingly expected to use alternative routes, while a larger share of exports could be shipped from ports on the Pacific Coast. Overall, the reduction in Panama Canal transits will increase average sailing distances for bulkers and increase tonne-mile demand,” says Gouveia.
