Bulk grain transporters, which move crops from the export center to Gulf Coast of the United States a ASIA sail longer routes and pay higher freight costs to avoid congestion and record travel costs in Panama Canal a road affected by the drought, as traders and analysts told Reuters.
The problem with shipping through one of the world’s main sea trade routes comes at the peak season for US crop exports, and higher costs threaten to dampen demand from suppliers. of corn and soybeans in the US They have already given up market share to Brazil in recent years.
Ships carrying crops face wait times of up to three weeks to pass through the canal, while container ships and others sailing on more regular schedules take up the few available slots. to travel.
Restrictions may continue to restrict cereal shipments until 2024, when the region’s rainy season may begin to recharge reservoirs and, therefore, normalize shipments in April or May, according to as indicated by the analysts.
“It’s causing a huge disruption in costs and delays,” he said. Jay O’Neil, owner of HJ O’Neil Commodity Consulting who added that the disruption was unlike anything he had seen in his 50 years of monitoring global shipping.
the Panama Canal Authority restricted shipping transit due to a severe drought that limited water supplies needed to operate its lock system. The Authority did not respond to a request for comment on the delays in grain shipments.
Currently only 22 daily trips are allowed, compared to about 35 under normal conditions. In February, trips will be further reduced to 18 per day.
Many carriers are often at the back of the queue, often looking for transit slots just days before arrival, while others, such as cruise ships and container ships, book months in advance.
The Authority is also the first to offer unique spaces available to its primary clients, none of which are grain carriers, as O’Neil emphasized.
Any available scheduled slots are auctioned off, but demand is extremely high. Some seats are sold for $1 million or more, costs that have become unsustainable for the grain trading business, which traditionally has low margins.
“The grain trade and the bulk carrier segment are the last customers that go through the Panama Canal. “I don’t trust the Panama Canal in the short term,” he added. Mark Thompson, senior trader at Olam Agri.
Wait times for bulk carriers increased from about five to seven days in October to about 20 days in late November, O’Neil said, causing more grain shippers to be diverted. .
Options include navigating to on about South America or Africa or transit through Suez Canal. But those longer routes can add up to two weeks to shipping times, raising the cost of fuel, crew and freight rentals.
The benchmark Baltic Dry which is considered the benchmark for bulk grain transportation, hit a one-and-a-half-year high on December 4, more than doubling from the previous month.
As grain prices fall from 2020 highs, higher freight costs will be passed on to grain and oil importers buying for human and livestock feed.
“Commercial companies are looking for ways to solve the problem, but it will certainly cost the end user a lot of money,” he said. Dan Basse, president of consulting firm AgResource Co based in Chicago.
In the second half of October, only five American Gulf bulk carriers bound for East Asia traveled through the Panama Canal, while 33 sailed east to use the Suez Canal, according to a report from United States Department of Agriculture (USDA). At the same time last year, 34 ships used the Panama Canal while only seven used the Suez.
Some US exporters are also diverting shipments of crops to Asia to load them Ports of the Pacific Northwest.
But that also comes at a higher cost, since the facilities are supplied with grain primarily by rail, as opposed to cheaper barge-delivered loads that supply Gulf Coast exporters.
Only 56.8% of all US corn exports in October were shipped from Gulf Coast ports this year, down from 64.9% in October 2022 and 72.1% in October 2021. , according to data from the weekly USDA export inspection.