Despite the lifting of transit restrictions, the Panama Canal has not yet recovered to its previous level of transits. One reason: US trade flows.
Between September 2024 and January 2025, ship capacity in deadweight tons transiting the Panama Canal was 10% below the 2019-22 average, according to a new report from shipping organization Bimco.
“Although there were no transit restrictions during this period, the transits of dry bulk, LNG and, to a lesser extent, tankers have not recovered to their historical levels,” says Bimco shipping analyst Filipe Gouveia.
Between June 2023 and September 2024, passage through the Panama Canal was restricted due to the low water level of Lake Gatun. Both the total number of transits and the draught of ships were restricted, and ships competed for the limited transit slots. Sectors such as the container sector usually operate on fixed schedules that allow them to book transit slots before other vessels. Transit slots that could not be booked were also auctioned, usually to the highest bidder, which gave some sectors an advantage.
The organization, which is mainly supported by shipowners, ship managers and brokers, justifies the non-return to normality or the development of a “new normality” with new trends: “Transit fees, changing trade flows and the establishment of a new normality could lead to ships not fully returning to the canal. In addition, for those sectors that have not fully returned to the canal, this has led to an increased demand for tonne-miles as sailing distances have increased. Instead of going through the Channel, ships are going around the Cape of Good Hope or Cape Horn,” says Gouveia.
US grain an important factor in the Panama Canal
For the bulk sector, a change in trade patterns for US grain, the largest cargo transiting the canal, has contributed to a decline in Panama Canal transits. The US is increasingly exporting grain from ports on the US West Coast, bypassing the canal. Since September, grain shipments from the US West Coast to Pacific ports are up 21% year-over-year, while shipments from the Gulf are down 6% year-over-year.
Coal shipments are also well below pre-restriction levels as ships continue to favor alternative routes. Conversely, smaller bulk cargoes passing through the Channel are approaching pre-restrictions levels, driven by stronger steel and fertilizer cargoes.
“In the LNG sector, vessels have barely returned to the Panama Canal due to cargo safety concerns,” Bimco continues. Only a few transit slots are offered for this sector, and overnight transits are not permitted. Therefore, the routes around the Cape of Good Hope or Cape Horn are considered more reliable and flexible.
“Although the return to the canal is slow for some sectors, we expect vessel capacity transiting the waterway to increase. Container, LPG and car carrier transits are already above historical levels and could increase further. However, the medium-term outlook for the bulk sector looks bleaker given the strong competition in grain transportation between the US and Brazil and the poor demand outlook for coal,” says Gouveia.
