Panama Canal operating at full capacity amid Iran conflict

The Iran conflict has pushed the Panama Canal to full capacity handling up to 38 ships per day, Marine Insight reported on March 21.

With the Strait of Hormuz blocked by the Iranian Revolutionary Guard, purchases have soared of LNG cargoes on the spot market loaded from US ports on the Gulf Coast.

About one-fifth of the global LNG supply is now off the market with the Strait of Hormuz closed and the world’s second largest LNG exporter Qatar now sidelined.

However, companies are also concerned about the safety of transiting through the Suez Canal. While attacks by Yemen’s Houthi militias in the Bab al-Mandeb Strait have largely been paused the threat still persists.

In late January, Houthi military forces issued a video warning to the US and Israel, threatening to resume maritime operations against shipping vessels in the Red Sea and Bab al-Mandeb Strait if regional tensions worsen. That threat continues to weigh in the minds of executives of shipping companies.

The Panama Canal finds itself booked to full capacity as traffic was already rising before the Middle East conflict between Israel, the US, and Iran.

With demand soaring among LNG exporters, Canal authorities are now expected to begin allocating one slot per day for LNG vessels, marking a massive shift from previous schedules which only offered about four slots per month.

Currently conditions are ideal for increased traffic through the canal as water levels have improved.

Congestion issues have plagued the Panama Canal in the past with droughts leading to delays and depth restrictions and requiring canal authorities to reduce the amount of vessels transiting through the canal each day.

In December 2023, typical waiting times of two to three days to transit through the canal had increased to an average of around 15 days for unreserved slots.

The lengthy delays and drop in transit volumes from US LNG producers led canal authorities to hold discussions in May 2024 with US LNG producers on methods for reducing waiting periods and increasing transit volumes.

The canal has also been able to handle an increased number of LNG vessels now as less container ships from Asia have been coming.