With traffic through the Strait of Hormuz still largely halted, another shipping chokepoint half a world away is getting a lot more expensive. A container ship recently paid a near-record $4 million to leapfrog a growing line of vessels waiting to cross the Panama Canal, Bloomberg reports. As drought and war squeeze one of global trade’s key pinch points, typical waits have stretched to around 10 days, the longest since May, the Guardian reports.
The Panama Canal Authority charges a flat rate for passage through a reservation process, but it also auctions off opportunities to skip the line. Starting bids for large ships open at $55,000 but prices spike when waits are long. The $4 million paid by the Singapore-flagged Seaspan Benefactor is more than double the recent average, according to Bloomberg’s sources.
The canal is being squeezed from two sides: El Nino-linked low water levels and the Middle East conflict that’s steering more ships away from the Red Sea and Gulf and toward Panama. Canal authorities have already cut limits on how low vessels can travel through the water, forcing ships to carry lighter cargoes. Authorities may tighten traffic further if water drops again, alarming shipowners who recall 2023’s drought-related bottlenecks. Similar low-water issues are also disrupting Europe’s Rhine, another major trade artery, the Guardian reports.