Economy News

A ship pays about $4m to jump the Panama Canal queue as war and El Niño squeeze trade

A container ship reportedly paid about $4m to jump the queue at the Panama Canal, where vessels are now waiting about 10 days to pass, the longest backlog since May according to Argus Media, The Guardian reports. Bloomberg named the buyer as the Seaspan Benefactor, a 10,100 TEU ship, and said the bid was more than double the average of the previous seven days. Auction bids normally start at about $15,000 for smaller ships and $55,000 for the largest.

Two forces are colliding. With the Strait of Hormuz and Bab al-Mandab effectively closed by the Middle East war, more ships are avoiding the Gulf and the Red Sea. At the same time the El Niño weather system is lowering water in Gatun Lake, which feeds the canal. The canal authority cut the maximum draft for its Neopanamax locks in July and plans further limits in late August and early September, forcing ships to carry lighter cargoes.

How each outlet framed it

• The Guardian — a sign of the fragility of global trade, with the Rhine also at record lows and shippers worried about a repeat of the 2023 drought logjam.
• Maritime Executive — auction prices soaring as waiting times build and the water level falls.

What we don't know yet: whether the authority will cap the number of daily transits, as it did during the 2023 drought. Demand is not the problem: transits rose 5% between October and June to an average of 35 a day.

What happened next: on 28 August Euronews reported that a tanker paid a record $5.3m to transit the canal amid the El Niño drought.