US grain exporters are being forced to detour through the Suez Canal due to problems with water depths at the Panama Canal, Freight Waves reported.
The Panama Canal Authority (ACP) introduced further limits on the daily number of vessel transits – to reach a low of 18 vessels/day by next February – due to unprecedented low water levels, World Grain wrote on 3 November.
At 79.7ft (24.29m), water levels on Gatun Lake – the water source for the canal – were 7% below the prior five-year average for October, according to a US Department of Agriculture (USDA) Grain Transportation Report.
Due to low water levels, the number of transits would be reduced as follows:
- From 3-6 November: 25
- From 7-30 November: 24
- From 1-31 December: 22
- From 1-31 January 2024: 20
- From 1 February 2024 until further notice: 18
“Further adjustments in the daily number of transits will be announced depending on the rainfall in the canal watershed and level of Gatun Lake,” the ACP added.
According to ship-position data from MarineTraffic quoted in the 9 November report, there has been a major shift away from the Panama route, with the majority of dry bulk vessels loaded with US cargoes now opting for the longer route via the Suez Canal.
“Particularly for grain cargoes out of the US Gulf to China and Asia, [the Panama Canal route] is the typical trade historically,” Gary Vogel, CEO of Eagle Bulk was quoted as saying during a conference call on 3 November.
“We’re now routing our ships through the Suez, which adds about 10 days and is slightly more expensive in terms of canal dues.”
The increased importance of the Suez Canal to US agriculture raised another concern with the Suez route facing risks on the geopolitical front due to the conflict in the Middle East, the report said.
The Suez Canal had been shut due to military action involving Israel twice before, in 1956 and in 1967-1975, Freight Waves wrote.
Any restrictions to Suez Canal transits due to an escalation of the Israel-Hamas war would increase the re-routing of US agribulk exports, and even longer voyages via the Cape of Good Hope, the report said.
Last year, ships carrying 36.18M tonnes of grain – including corn, soyabeans, rice, sorghum, barley and wheat – transited the canal from the Atlantic Ocean to the Pacific Ocean and 2.2M tonnes was shipped from the Pacific to the Atlantic, World Grain wrote.
Grain is the second leading commodity – after petroleum – transported on the canal, according to the report.
The PCA encouraged vessels to use the Transit Reservation system to guarantee a transit date and to reduce the possibility of delays.
