Connectivity 6 minute read

Panama Canal prepares to adapt to high season fluctuations

The waterway will take advantage of improvements to its booking system to increase vessel traffic reliability for its customers.

The last quarter of the year usually marks the start of the peak season at the Panama Canal, as the global shipping industry and supply chains prepare for increased demand. Each fall, the waterway is ready for the arrival of an increased number of ships, many of them loaded with holiday gifts or petroleum products to provide heating for homes during the cold winter months.

However, this year, numerous global events continue to drive volatility in market conditions and trade flows, such as the ongoing conflict between Ukraine and Russia, remnants of pandemic-related delays, and inflation-driven changes in consumption patterns. Some container ships, for example, have cancelled a number of voyages from Asia to the U.S. and Europe ahead of the peak season.

While the Panama Canal prepares for the peak season, each year brings its own challenges that require remaining adaptable and collaborative. This year, the waterway will take advantage of recent modifications to its reservation system to manage transit demand, minimize waiting times and continue to be a reliable and valuable partner to the industry.

The Canal’s reservation system increases the reliability of transit service for the customer.

In essence, this system offers customers the ability to book their transits on a specific date for an additional fee. It also offers auction slots, which allows customers to request slots that are available on the desired transit date.

While optional, this service is very advantageous, as it ensures timely transits and allows the Canal team to plan ahead to schedule transits more efficiently. Booking a transit in advance not only provides certainty, but also allows customers to avoid the queue of vessels arriving without reservations and experiencing fluctuating waiting times.

“Each daily schedule of vessels transiting the Canal is unique, which means it can be difficult to predict how long an unbooked vessel will have to wait to transit,” said Abraham Saied, Manager of the Panama Canal Integrated Operations Control Center. “Unlike an airplane, where passenger capacity is fixed and each passenger occupies a seat, the scheduling of ships depends on their dimensions, cargo, draft, transit direction, navigation restrictions and even the time of year. A larger vessel, for example, will require more processing time at the locks and more resources, so the number of vessels that can transit that day will be less,” he added.

Waiting times can change from one day to the next

A wide range of factors impact Canal waiting times, some of which can be planned for, while others are more unpredictable. Greater use of the reservation system, for example, improves transit reliability, thereby increasing transit certainty and waiting times.

However, one of the biggest challenges to estimating waiting times can change overnight: weather. During Panama’s dry season, which lasts from December to May, the waterway often faces challenges with water availability. This requires the implementation of water conservation measures, which can reduce the Canal’s ability to transit ships with greater frequency and deeper drafts. During the rest of the year, the rainy season in Panama can generate fog that limits vessel visibility and can disrupt transit operations.

Scheduled maintenance and variability in certain markets may also affect vessel transit schedules. Liner services, including container ships, car carriers and passenger vessels, have fixed itineraries and plan their transits well in advance. Other segments, such as liquefied natural gas (LNG) and liquefied petroleum gas (LPG), may trade on the spot market, which means they often do not have a fixed itinerary or port of call well in advance.

Adapting to increasing transit demand

The combination of these factors can cause fluctuations in waiting times during the interoceanic waterway’s peak transit season, which runs from November to March. Taking this into consideration, the Panama Canal has been adjusting its booking system in recent years to better manage the demand for booking slots and provide transit certainty for customers.

For example, the global economic recovery in January 2021 took off in the midst of a record cold winter in Asia, leading to a historic increase in LNG demand. These circumstances triggered a surge of vessels arriving at the waterway with the expectation of exporting LNG from the United States to Asia. As a result, the Canal adjusted its booking system to offer LNG carriers more opportunities to book a transit slot days before the expected date.

A month later, the Canal also began auctioning slots that became available for Neopanamax vessels, including LNG carriers, two to three days before the designated transit date due to cancellations, date changes, early transits of booked vessels, or other reasons. Similarly, in November 2021, the waterway increased the auction quotas available for Neopanamax vessels every Tuesday, allowing customers with lower rankings a greater opportunity to obtain a weekly booking. Recently, another auction quota was established for Neopanamax vessels every Wednesday for transit dates starting in October 2022.

Preparing for this peak season and next

Modifications made in recent years have helped to significantly increase the number of transits scheduled in advance. Last year alone, transits booked, either through regular booking or auction, accounted for approximately 70% of total Panama Canal transits, up from 55% three years earlier.

However, as the peak season approaches, the Panama Canal team continues to evaluate methods to improve transit conditions, taking into consideration factors such as vessel mix and other operating conditions.

“Our workforce, from operations to the marine transit team, is continually working on introducing advanced systems to adapt to the ever-increasing demand for transiting vessels,” said Deputy Administrator Ilya Espino de Marotta.

“As we adapt to fluctuating market conditions, our focus and priority is, and always has been, the safety of our partners.

In addition, the safe and efficient transit of vessels, the maintenance and improvement of the Canal’s infrastructure, and a full commitment to facilitating global trade remains an integral part of our organization’s mission,” added Marotta.

 

In the meantime, the Canal will continue to provide customers with estimated waiting times for unbooked vessels, posted daily on its website. The Canal’s vice president of operations updates customers and local shipping agents on estimated waiting times and transit projections, as information can change from minute to minute.

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