Ships carrying cargoes around the world are waiting for days to pass through the Panama Canal, as pandemic-hit staffing caused congestion at the key pinch point.
Long waiting times are affecting shipments of liquefied natural gas and liquefied petroleum gas from the US Gulf Coast to Asia, according to people with direct knowledge of the situation.
The waiting time, which for vessels with unbooked slots is now as long as between 10 and 15 days, have contributed to a rally in the cost of chartering an LNG tanker on the spot market and added to disruptions affecting the supply of super-chilled fuel, the people said.
The Panama Canal is a crucial waterway for cargoes from the US, the fastest growing LNG supplier, to reach markets in Asia, the biggest consumer. Delays coupled with soaring charter rates may affect economics of supplies from the US into Asia and force cargo owners to choose alternative routes.
The delays stem from traffic congestion as well as the Covid-19 pandemic reducing resource capacity, the people, who asked not to be identified said. Even LNG vessels with booked slots are experiencing 5 to 10 days of delays, two people said, who asked not to be identified because the issues are private.
In the LPG market, logistical delays suffered by Asia-bound tankers prompted a spike in regional prices as buyers sought alternative supplies, two traders who asked not to be identified said. The disruption to flows coincided with seasonal demand from Northeast Asian buyers in South Korea, Japan and China during the year-end winter period.
Delays for LPG loadings from the US to Asia have occurred for the past few weeks, with waiting time for non-booking slots of up to eight days.
The Flex Aurora liquefied natural gas carrier waited for nine days to pass through the canal for a passage that typically takes less than a day. The tanker approached Panama Canal on October 15 and entered it northbound October 24. The vessel is now loading at Cheniere Energy’s Corpus Christi plant in Texas , according to ship-tracking data on Bloomberg.
Shipping rates for spot LNG vessels are already surging with reduced availability of spare vessels as delays mean tankers are on journeys for longer.
The Panama Canal Authority couldn’t be contacted for comment after calls went unanswered at every publicly available number.
With coronavirus cases surging across the country, the Panamanian Ministry of Health imposed lockdowns and restrictions, limiting the number of workers at the canal, FGE said in a note.
“Furthermore, the health ministry has mandated that the Panama Canal Authority must impose more stringent checks and additional procedures for transiting vessels to curb the spread of Covid-19,” the note said. “With these developments coinciding with an uptick in seasonal demand for Canal transits, it could take some time before delays start to ease.”
