Merchant ships transiting the Panama Canal face increased costs due to disruptions caused by the closure of the Strait of Hormuz resulting from the war between the United States and Iran and the drop in water levels linked to this year’s intense El Niño weather phenomenon.
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As a sign of the fragility of global trade, a container ship reportedly paid about 4 million dollars to skip the queue of vessels waiting to pass through that strategic maritime point, reports the British newspaper The Guardian.
The administrator of the Panama Canal, Ricaurte Vásquez, explained to journalists the case of a client who recently paid that amount, a record figure in auctions of three to five slots per day that are submitted to the market for those without a reservation. According to the administrator, the auction is a permitted and agreed-upon mechanism with users to meet their needs.
“A ship had a need to reach its destination port. If it did not reach its destination port, the penalty would have been 10 or 15 times greater, and it turned out to be cheaper to pay here than to suffer the loss of income on the other side,” he detailed.
This ship, the administrator explained, did not have a reservation and went through an auction, something that has already happened in three cases. One of them was a vessel carrying fuel to Europe that was later redirected to Singapore, he recounted, according to CNN.
The administrator said the situation is not “a whim of the Canal,” but “a bidding and counterbidding, until the last one said ‘enough’.” “They had no slots, no reservations, and the spaces open for auction are opened so they can compete. By doing this, they decide how high the price goes,” he explained.
On Wednesday morning, there were 110 ships waiting to cross the 82-kilometer interoceanic route: 78 with an established reservation and 32 without one.
Not all ships without reservations resort to the auction, which is a system that uses “specific time slots already incorporated into the Canal’s calendar for this purpose and does not affect ships with confirmed reservations nor alter the established transit order,” according to the Panama Canal Authority (ACP).
In a comment requested by EFE, the canal administration stated on Wednesday that auctions “have recorded an increase in market costs due to changes in supply and demand in global trade,” a trend that has been ongoing for months.
Ships currently wait about 10 days to transit the commercial route connecting the Pacific and Atlantic oceans, representing the longest delay since May, according to Argus Media. This route is preferred by shipping companies as it usually reduces costs and transit times, especially for large retail and energy companies trading between Asia and the United States.
Although shipping companies usually pay a fixed fee to reserve a slot to transit the canal, the autonomous state entity that manages the waterway also holds daily auctions allowing shipowners to place bids to avoid the waiting list. Initial bids range around $15,000 for smaller cargo ships and $55,000 for larger vessels, but these prices can skyrocket during times of heavy congestion or high demand.
In fact, CNN notes, the users’ need to overcome the blockade in the Strait of Hormuz has caused the price of reservations obtained through auctions to soar. According to the administrator, they have now risen to an average of between $400,000 and $425,000.
The administrator, however, assured that ships paying high amounts are “extreme cases.” “Ships that have paid amounts above millions of balboas to transit the Canal do not even represent 5% of the ships aspiring to transit,” he assured.
According to Bloomberg, the buyer of the $4 million transit slot was the Seaspan Benefactor, a vessel with a capacity of 10,100 TEU (twenty-foot equivalent units). Apparently, the payment was more than double the average bid made during the previous seven days, according to a document accessed by the agency.
“It was a ship carrying fuel to Europe, and it was redirected to Singapore, and it needed to get there because Singapore is running out of fuel,” said Ricaurte Vásquez, canal administrator, cited by the Los Angeles Times.
EFE adds that two Aframax tanker ships paid three million each, isolated cases reflecting temporary conditions due to increased demand, as explained at the time.
“In many cases, the value of time, particularly for energy cargoes subject to contractual delivery windows, can far exceed the auction price,” the Canal stated Wednesday, maintaining that auction values are determined by multiple factors, including urgency and commercial priorities of each client, and elements such as freight rates and fuel prices.
The Middle East crisis has positively impacted the Canal’s numbers. In the second quarter of this year, up to 41 ships passed daily through the waterway, when the average is 36 or 37. In fact, transits grew by 5.2% and revenues by 17% in the first nine months of the current fiscal year (October 2025 – June 2026), driven by the container ship and liquefied petroleum gas (LPG) segments, according to official data.
Shipowners are willing to pay significantly higher prices at auctions to avoid queues, as more ships stay away from the Gulf and the Red Sea due to fighting in the Middle East effectively closing the Strait of Hormuz and Bab el-Mandeb, the narrow maritime passage between the Arabian Peninsula and the Horn of Africa, highlights The Guardian.
According to the Financial Times, prices for traveling the Panama Canal’s busiest maritime routes have reached historic highs at a time when water levels are dropping due to the rapid development of the El Niño weather phenomenon.
Earlier this month, the Panama Canal Authority (ACP) announced it would impose minimum navigation height limits, known as draft, at the end of August and early September to maintain traffic flow.
The authority also reduced the maximum authorized draft in July, a measure forcing ships transiting its Neopanamax locks—the widest and deepest section of the canal—to carry lighter loads.
The decision was based on water levels and forecast conditions for Gatun Lake, an artificial reservoir feeding the canal, according to the ACP, adding that it is “prepared to implement preventive measures” during El Niño, based on lessons learned during the 2023-2024 phenomenon and monitoring of weather conditions.
Some shipowners fear the ACP will impose restrictions on the number of ships that can transit the waterway, as happened in 2023 when a prolonged drought in the Central American country caused a major backlog.
This comes after the ACP recorded a 5% increase in the number of transits between October and June, representing an average of 35 daily. During this period, a greater tonnage was transported through the canal, mainly driven by container ships and liquefied petroleum gas carriers, the ACP reported.
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