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Panama Canal Daily Transits Rise 20 Percent After Strait of Hormuz Closure
Shipping companies have rerouted vessels through the Panama Canal following the closure of the Strait of Hormuz. Daily traffic has increased from 34 to as many as 41 transits, with liquefied natural gas carriers and oil tankers accounting for most of the growth.
May 21, 7:09 PM·1m read1 source
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The closure of the Strait of Hormuz has prompted shipping companies to divert vessels to alternative routes, increasing traffic through the Panama Canal. Daily transits have risen from an average of 34 at the end of February to peaks of 41 on some days, a 20 percent increase.
Energy-transporting ships have driven the growth, with liquefied natural gas carriers doubling and oil tankers rising up to 37 percent compared to the same period last fiscal year.
The additional traffic has raised canal revenues by up to 15 percent. Panama receives approximately one-quarter of its government revenue from canal operations. Auction prices for same-day transit slots have climbed from an average of $135,000 before the Iran war to $385,000 in March and April, with some vessels paying as much as $4 million for a slot.
The Panama Canal Authority is advancing a modernization plan scheduled for completion in ten years. The canal's lock system requires large volumes of fresh water from Gatún Lake for each transit, which limits capacity during dry periods. Canal officials must balance higher demand with water conservation measures to avoid repeating the 40 percent drop in daily transits that occurred during the 2023-2024 drought.
The canal's fiscal year runs from October through September. Officials have stated that reinvestment of current revenues in maintenance and water-efficiency projects will be required to sustain the higher traffic levels.
