Panama Canal Pushes Back on ‘Line Jumping’ Claims as Auction Slot Prices Surge

By Lori Ann LaRocco – Panama Canal authorities are trying to debunk the misconception that auction slots are a free pass to cut the line.

“People are saying, if you buy an auction slot, it allows you to come in at the last minute and jump the line,” said Victor Vial, CFO of the Panama Canal Authority (ACP). “That’s not the case. No vessel is skipping the line. The auction gave them a slot that was already accounted for to transit that day.”

Three auction slots are reserved daily to accommodate segments like LPG and LNG that need space on short notice.

Yumiko Casiano, revenue management team leader at the Panama Canal, explained to gCaptain that canceled bookings are then added to the list of auction slots. Three to five auction slots can be available daily.

“The change was made to ensure transparency and fairness in determining priority and pricing through an auction system, rather than having a fixed order or first-come approach,” explained Vial. “We do not decide who transits the Canal and at what price. The market does. The auction is demand-driven.”

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A recent $4 million auction slot for a Neopanamax transit was last seen during the November 2023 Panama Canal drought.

Vial said bids exceeding $1 million to $4 million reflect demand.

“The auction process is transparent,” he said.

The price for an auction slot has steadily increased as more tankers loaded with U.S. crude, LNG, or petroleum products head to the Canal for delivery to Asia. Before the war, auction slots were between $135,000 and $140,000. In March and April, auction slots increased to approximately $385,000.

ACP authorities credit wet weather for enabling them to increase transit velocity.

“We got plenty of water,” said Vial. “It also depends on how you manage the mix of ships. We have ramped up capacity by 15 percent. The Panama Canal is stepping up.”

Vial said this increase in capacity could be sustained for another few months.

“The duration of the larger transit numbers depends on whether the rainy season shows up on time,” said Vial. “The inventories of water help.”

The armada of vessels loaded with U.S. energy shows no signs of slowing down, according to ACP tracking.

“We had a nice recovery in LPGs and dry bulk,” said Vial. “Containerships were doing quite well as well. We started to see the surge in transits of chemical and oil tankers starting February 28 and March 1.”

Before the war, seven tankers traversed the canal. Today, around 12 tankers are transiting daily in the Panamax lane, with some also using the Neopanamax lane.

“Tankers and container ships are staying pretty steady, and LNGs are surging from a very low base of five a month to now around 15,” said Vial.

Vial added the ACP had expected a lower number of daily transits this year due to tariffs. Initial expectations were around 32 transits a day, but actual numbers were higher. Before the crisis, the Panama Canal had 34 daily transits. The canal is presently moving 40 to 41 vessels daily.

“We have between 75 and 80 percent of our bookings for both the Panamax and Neopanamax filled for the next 30 days,” said Vial. “Clearly, there’s more demand, and bookings are being made earlier because people are looking for certainty further in advance.”

The ACP amended its first-come, first-served system after the 2024 drought, moving to an advanced reservation system: the Long-Term Slot Allocation system (LoTSA) and a booking system dedicated to liquefied natural gas (LNG) vessels. All vessels are required to hold a reservation before transiting. Other options include last-minute reservations and the auction mechanism.

A new version of LoTSA will open on April 28 for slots transiting on July 5. It is called LoTSA 2.5 and will give LPG and LNG market segments the option to choose Transit in Advance and Change Day Policy.

“This service is used for voyage efficiency or if they want to spend less time at port,” explained Casiano. “They can move their days to adapt their transit date. They are asking for more flexibility because there are too many disruptions during their voyage.”

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