The maritime congestion that has slowed passage through the Panama Canal since last year amid strong demand for liquefied natural gas (LNG) and other goods between Asia and the United States has finally eased. , after wait times peaked at 16 days for ships with unreserved slots.
The historic cold that depleted Asian stocks last winter and boosted demand in late 2020 has prompted buyers to secure cargoes more aggressively this year. Asian prices have hit record highs this year, attracting US LNG shipments and creating fierce competition with Europe for supplies.
“Arbitration has been open to Asia for most of 2021, contributing to Panama Canal congestion,” said Jason Feer of Poten & Partners, global head of business intelligence at the shipping brokerage.
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Trade to Europe and Asia is still profitable, with recent waiting times for vessels without reserved slots having drastically reduced. They are around six and seven days for northbound passage to the Gulf Coast and three days for southbound traffic to the Pacific Basin, according to the Panama Canal Authority (PCA). Vessels with reserved slots suffered fewer delays. The canal is the preferred route between the Atlantic and the Pacific, providing a faster route to Asia than other alternatives.
Soaring freight rates
Demand and longer shipping times to Asia have pushed freight rates to record highs in recent weeks. Spot rates in the Pacific Rim topped $ 300,000 / day last month, according to Spark Commodities. They have since plunged below $ 200,000. Spark CEO Tim Mendelssohn told NGI that record natural gas prices in Europe, now at a rare premium over those in Asia, are bringing LNG shipments back to Europe, reducing tonne-miles and reducing the cash shipment request.
The short-term outlook is stronger as competition is expected to remain strong for LNG this winter. Energy Aspects told customers in a recent note that it expects some congestion in Panama from January to February.
Congestion has been a constant challenge for LNG vessels without reservations to Asia. The number of LNG carriers passing through the canal has increased significantly, from 399 in 2019, to 419 in 2020 and 537 this year, according to the PCA.
Usually, US flows are expected to be split between Europe and Asia, Feer told NGI, but last year’s cold weather has depleted stocks in Asia and Europe. The unusually hot summer weather in Asia also saw more US LNG heading east for rapid consumption, which helped keep Asian prices high through the fall.
To help reduce canal congestion, the PCA changed its transit reservation schedules in early January to allow LNG carriers to reserve two slots instead of one. Reservations can be made 15 to 80 days in advance. Auctions have also been introduced by the authority, Feer said, to sell all available slots days before transit, due to last minute cancellations.
“Tanker tariffs were higher than usual, in part due to the cold winter of last year, which made it difficult for buyers to find cargoes or ships at any price,” a- he added. “Many charterers signed multi-trip, short- and medium-term charters in early spring, which led to an early spike in fares and a lack of availability as many vessels were chartered earlier in the year. , which resulted in increased traffic. passing through the canal.
As US export terminals increase their liquefaction capacity, more vendors plan to export to Asia and will continue to depend on the Panama Canal. A total of 516 million tonnes passed through the canal, including containers, grains, chemicals and LNG, from October 2020 through September, according to the PCA.
Jamison Cocklin contributed to this story