LPG in World Markets: Freight Volatility Increases on New Panama Transit Reductions

This current feature was extracted from the latest edition of Poten’s LPG in World Markets, a monthly service published on November 7, 2023.

VLGC freight rates have become extremely volatile in the past few months. The situation is likely to be exacerbated following the decision by the Panama Canal Authority (ACP) to further reduce the number of transits for the Neopanamax locks from November.

Despite all the measures taken so far, Gatun Lake’s water levels have continued to decline to exceptionally low levels for this time of the year, on record droughts. Moreover, current rainfall forecasts indicate the situation will not change for some time, according to ACP.

Therefore, from Nov. 3, 2023, to Nov. 7, 2023, the number of booking slots will be reduced to 25 from 31, with eight slots for the Neopanamax locks. The gradual reduction will continue in the weeks following thereafter. By Feb. 1 2024, and until further notice, the number of booking slots will be reduced to only 18 slots per day, with five allocated for Neopanamax locks, which is about half of the normal capacity.

For booking dates November 8-14 and in January and February of 2024 the number of Panama Canal transits allocated to Period 3 will be reduced to zero, according to the ACP. This will effectively eliminate the ability of any unbooked vessel to participate in the special auction to reserve a transit slot, which means all unbooked vessels will by default have to transit the longer route on both laden and ballast voyage.

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