Panama Canal

Recent developments announced by the Panama Canal Authority (ACP) appear to signal a cautious return to more stable operations following a difficult dry season that strained the Canal’s resources and disrupted its efficiency.

At the heart of these changes is the increase in the maximum allowable draft for ships transiting the Neopanamax Locks. Effective immediately, the allowable draft has been raised to 15.24 meters, or 50 feet, in Tropical Fresh Water. The ACP states that this adjustment is not just a technical modification but a sign of recovery. It will be recalled that draft restrictions had been tightened in recent months due to lower water levels in Gatun Lake. Now, with water levels improving, the ACP has cautiously eased these restrictions, reflecting its more optimistic outlook for the coming weeks.

In addition to this change, and while recognising the need to maintain flexibility and efficiency in an increasingly competitive global shipping market, the ACP has also modified its transit reservation or booking system. Beginning 1 September 2024, the number of daily booking slots for vessels will increase, offering 36 slots each day. This includes slots for Neopanamax, Super, and Regular vessels, marking a significant expansion in capacity. The ACP said that these additional slots aim to improve the flow of vessels through the Canal, addressing recent delays and backlogs.

A further change also includes the creation of the Long-Term Slot Allocation (LoTSA). This is a new system for allocating transit slots to Neo-Panamax vessels via sealed bids (excludes LNG and LPG vessels). This method allows customers to secure transit slot packages for an entire year, starting from January 2025. The LoTSA method is meant to enable customers to bid for specific slots in advance.

These updates come in the wake of a challenging period for the Panama Canal, affected by climate change. The dry season, which saw water levels in Gatun Lake drop significantly, forced the ACP to impose stringent draft limits and reduce the number of daily transits. Such measures were necessary to ensure the Canal’s continued operation, but they also highlighted the fragility of this vital waterway in the face of environmental pressures.

Suez Canal

The security situation in the Red Sea and its impact on the Suez Canal remain severe. Attacks against shipping by Houthi militia in Yemen continue, and there is now an increasing possibility of a major regional war between Israel and Iran and/or its Hezbollah proxies in Lebanon, in addition to the ongoing conflict in Gaza. The crisis continues to have a profound effect on trade flows, with transits through the Suez Canal around 60% lower than normal.

Until recently, attacks against shipping had decreased compared to earlier this year, possibly as a consequence of military strikes by US coalition forces against the Houthis’ shore capability and also due to the changing dynamics of the conflict, which have seen an increase in Houthi attacks directly against Israel. In August, however, attacks against ships appear to have continued with renewed intensity. The Greek-flag crude tanker Sounion was hit by Houthi weaponry some 90 miles from Yemen on 23 August.

As a minimum, the crisis is expected to endure for as long as Israel’s campaign in Gaza continues, although it is possible that the Houthis would either refuse to accept the credibility of any ceasefire or else continue to target shipping to gain international attention. Meanwhile, following recent Hezbollah missile attacks against Tel Aviv, there is growing concern that, if the conflict expands, the attacks could extend into the Eastern Mediterranean, potentially targeting shipping associated with Israel and its allies.

In light of the continuing security crisis, with its impacts on the number of Canal transits, a small ICS delegation, which will include the ICS Secretary General, will be going to Egypt on the 4 of November to visit the Suez Canal Authority (SCA) to discuss current developments and also renew ICS existing Memorandum of Understanding with the SCA.

Members are kindly encouraged to contact Meme Lamlum, ICS Secretary, Canals Sub-Committee , at meme.lamlum@ics-shipping.org with any other suggested agenda items for the meeting with the SCA on 4 November.