Tradewinds: New Panama Canal Locks could Weigh VLGC Rates Down

9 May 2016: “Michael Panas, consulting manager at Poten & Partners, says the impact of the new locks will emerge over the next several months as new rates clear the market. How deep that impact will be depends on how many charterers will be able to book slots in the new locks. “The Panama Canal Authority has only authorized four slots, two in each direction, during the initial operation of the new locks. But they are expected to ramp up closer to  1- slots eventually. While freight rates should be lower, charterers will have to weigh a laden toll of $190,000 – per -day VLGC transiting the new locks. Charterers could also face dead freight costs if draft restrictions limit how much gas can be loaded into a ship. “Shipowners may have to rely  more on slow steaming and or the reposition of ballasting vessels if more transits occur through the new canal locks. ‘Charterers are more bullish about the LPG throughput of the Canal but shipowners are more bearish,’ Panas said.  ‘The reality is somewhere in between.’ Shipowners hope the growing use of US-sourced LPG in Asia’s petrochemical industry will keep utilisation high on both the Panama Canal and African cape  routes. But Panas says expansions in the Far East will face  a hard time offsetting lower tonne-mile demand due to shorter hauls.’The question now is growth above and beyond what is already expected,’ Panas said.”