Panama Canal Lifts Draft Limits, Starts Transit Tests

The Panama Canal Authority (ACP) has begun testing its newly finished second set of locks with transits by the bulker Baroque on the Atlantic side of the canal. The 115,000 dwt vessel has been chartered for a series of trial runs in advance of the canal’s formal opening June 26.

The Baroque exiting the new locks and turning for another pass (courtesy MarineTraffic)

The new lock facilities rely on tug assists during operation, and some tug captains have expressed skepticism at the prospect of entering the locks at either end of a large vessel. But the ACP and outside experts say that this is the method used in many other lock systems around the world and the risk is manageable given training and proper procedures. 

The beginning of Central America's tropical rainy season has arrived just in time for the new locks’ opening ceremony, alleviating a potential problem with navigable depth. The ACP has now lifted all draft restrictions imposed earlier this year due to low water levels in Gatun Lake, which had been depleted by a long-running drought. 

Earlier this week, the ACP's competitor for the Asia-US East Coast trade, the Suez Canal, announced new discounts for container ships on the route – widely seen as a move to fend off the threat of enlarged capacity at Panama. Box ships coming from U.S. ports south of Norfolk will get 65 percent off if they are headed to Port Klang or points east – so long as they don't make commercial port calls in between. Those departing from Norfolk itself or points north and headed for Port Klang or points east will get 45 percent off.

The discount will be in effect June 6 though September 3, at which point it may be extended. It deepens earlier rate cuts of 30 percent off for the U.S. East Coast to Port Klang container ship route, which were announced in April. 

The debate on whether or when the newly enlarged canal will mean diversion of additional U.S. West Coast container traffic to East Coast and Gulf Coast ports is not yet concluded, but Panama expects a different vessel class to boost traffic right away: large LNG carriers, and a lot of them. "The canal opens the possibility for that gas to reach Asian markets in a more competitive way because the Panama Canal route is the shortest," said official Manuel Benitez, speaking to Bloomberg. He says that as many as five LNG carriers a week will pass through the canal – 20 mtpa of LNG, nearly a tenth of global volume – and that operators have already made the transit reservations.