Panama Canal: Is the Situation Affecting the Tanker Markets?
According to Gibson, “recent vessel tracking data shows that for the smaller and more versatile MR sector, where local market dynamics often require a canal transit there has been volatility in the number of vessels waiting to cross. This may suggest, intraregional flows could be reduced or face further logistical challenges going forward. Meanwhile, for tankers larger than MR size, the canal is less important and transit numbers remain low even in normal market conditions, meaning that there has been little material impact on these larger tanker sizes”.
“For MRs, however, canal issues were one of the factors supporting firmer freight rates in the US Gulf (USG) during August. As such, this size is likely to be the most impacted tanker sector going forward, if delays continue beyond September. This could see USG-West Coast South America and USG-US West Coast flows tighten to some extent. The economics of diverting an MR around Cape Horn is unlikely to be attractive from a TCE perspective and so the only real solution is a return to normal transit times or vessels increasing their transit prebooking to optimise their sailing days. However, there are limitations to how many of each vessel type can cross the canal per day, which would require preference being given to these tankers which for the time being remains unlikely. We are unlikely to see much of an impact on crude flows given the relatively low volumes passing through to the pacific side of the canal and more of the USG crude loading onto VLCCs, which cannot use the canal”, Gibson said.
The shipbroker added that ‘what does this mean going forward? Firstly, regional tonne miles are likely to increase, which will effectively impose lower vessel availability out of the USG. Ironically, such an increase in tonne miles may marginally improve some vessels CII scores, given the longer distances they will be sailing. Secondly, canal delays could lead to increased flows from the Far East, as higher freight rates and transit delays from the US Gulf shift pricing more frequently in favour of Asian barrels into the West Coast of South America. Thirdly, if such water shortages and delays start to develop a seasonal pattern due to climate change, then this is likely to add new complexity in the market, which will require some degree of forward planning towards future third and fourth quarters which could see higher volumes in Q2, depending on East Coast South America and US West Coast storage capacity and demand levels. All in all, whilst higher rainfall in Panama is expected in the second half of September, which will bring some relief and a return to normal canal traffic, the tanker market remains largely unaffected, except for regional MRs and we wait to see what conditions next year brings”, Gibson concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide