VLGCs face increased Panama Canal fees
The Panama Canal Authority (ACP) plans to raise transit tolls for LPG tankers from 1 October.
Under the new toll system, the return trip cost for a very large gas carrier (VLGC) loaded with an 84,000m³ cargo will increase by 29pc, to $455,080.
Assuming a 46,000t cargo with a volume of 84,000m³, Argus estimates the cost of a round-trip shipment from the US to Asia-Pacific will increase by $2.23/t. This amounts to less than 0.6pc of the delivered Asia Pacific LPG price as of 12 May, as assessed by the Argus Far East Index (AFEI).
But unworkable US-Asia spot arbitrage economics have resulted in cargo cancellations and periods of inactivity on the route this year. Increased transit tolls will present a further obstacle to the arbitrage-driven market.
The Panama Canal reduces the transit time of tankers carrying LPG produced in the US to markets in Asia-Pacific. Demand for VLGC transits has been “greater than anticipated”, said the ACP. It said the new tolls will not “significantly impact the competitiveness of trade in products transported through the Panama Canal”.
VLGCs gained access to the Panama Canal after the opening of an expanded lock system in June last year. Since then, 1,406 Neopanamax tankers — which were previously too large to use the canal — have transited, with LPG carriers accounting for nearly 30pc of this, according to the ACP.
The ACP board approved the new toll structure on 25 May. Interested parties will have the opportunity to provide feedback on the new tolls at a public hearing held in Panama City on 5 July.