The $4 Million Fast Pass Through the Panama Canal

Somebody paid $4 million on Monday for the right to move a ship through the Panama Canal ahead of everyone else. The buyer was the owner of the Seaspan Benefactor, a 10,010 TEU container ship, that’s $800 per container (FEU). What that money bought was one auctioned transit slot, at a price that came in near a record and well above anything the previous week had produced.

For context, vessels are currently sitting roughly 10 days before they get a crossing. That's the worst backlog on the Pacific-to-Atlantic run since May. Check out Flexport Atlas for live monitoring.

We appreciate the dedication to on-time performance

Flexport has 30 containers aboard the Seaspan Benefactor across 14 clients.

ONE (Ocean Network Express) operates the ship on the Premier Alliance and Evergreen loop from Asia to the US East Coast. The ship’s recent track runs through South Korea before the leg toward Panama, and has been holding at anchor in the Gulf of Panama waiting to head north.

We've always appreciated ONE's dedication to on-time performance. Turns out that dedication has a going rate, and this week the going rate was seven figures. Respect.
Anyone who's stood in a theme park queue at 2pm in July knows this trade already. One line is free and stationary. The other costs money and moves. Panama sells the same two products. The gap is that a Lightning Lane runs about thirty bucks and ends at a roller coaster, while this one ran $4 million and ends at a set of locks.

What jammed up the Canal

Start with the war. Traffic through the Strait of Hormuz thinned out, and Bab el-Mandeb followed. All that redirected tonnage lands in the same queue as everything else. Energy and chemical cargo that used to cross the Gulf is hunting for a westbound path now, and Panama is the obvious candidate.

Repairs are the second problem. Work at the locks runs into September, and part of it touches the chambers built for the biggest ships. Fewer daily transits, more ships wanting one.

Rain is the third. El Niño hasn't filled the watershed the way the canal needs, so draft limits in those same chambers came down. Shallower draft means each ship carries less, and less per ship means more ships for the same volume of goods.

The queue math

Tuesday afternoon: 103 vessels waiting. Seventy-two of them hold a booking. The other 31 are hoping something opens up.

Someone has been out there 33 days. A Super-size chemical tanker, northbound, more than a month into the wait.

Then there's the part that changes how you read the $4 million. Panama's auction calendar for the balance of August shows zero slots. Nothing to bid on for the rest of the month.

September 7 is the next date with anything on it, and that anything is one regular slot.
Seaspan wasn't overpaying for convenience. They bought one of the last seats before the room closed for three weeks.

Why a container ship?

Auction slots usually go to tankers. A cargo of liquefied natural gas or refined product carries enough value that a seven-figure bid pencils out against a single voyage.
Container ships work differently, which is what makes this one interesting. The Benefactor holds a position in a fixed rotation. Berth windows on the far side, feeder connections, chassis and rail appointments inland, all of it scheduled around the ship showing up when it is supposed to. A missed transit doesn't cost 10 days one time. It rolls into the next sailing and the one after that, and every container that was supposed to connect misses too. Set $4 million against a whole loop of broken schedules and thousands of late containers, and the bid starts to look like math instead of desperation.

What next?

Expect Canal costs in your rates if you move anything through Panama, either direction.

Widen your Q4 transit buffers past whatever you used last year given the current wait times.

Run the West Coast discharge and intermodal comparison again. It won't win for every lane or every SKU, but enough has changed this month that a springtime answer isn't good enough anymore.

Our 14 clients with freight on the Benefactor know exactly where their cargo sits. If Panama touches your network, ask us to run your options against your actual freight before the next booking window shuts.