Tanker pays record $5.3 million for Panama Canal transit amid El Niño drought

A liquefied petroleum gas tanker has set a new record by paying $5.3 million for priority passage through the Panama Canal. The South Korean company SK Gas secured this premium slot for the vessel G Spirit to transit the vital shipping lane on September 1.

This exorbitant fee reflects the severe impact of the El Niño weather phenomenon on the canal's operations. Panama recently declared a state of emergency due to El Niño, which has caused critically low water levels in the canal owing to a widespread drought across the region.

El Niño, characterized by rising surface temperatures in the equatorial Pacific, disrupts global weather patterns, leading to erratic conditions. This year is predicted to be the hottest on record, exacerbating the drought's effects.

To manage the dwindling water supply, the Panama Canal Authority will reduce the number of daily transits. Starting September 3, the number will decrease from 36 to 34, and further to 32 later in the month. While ships typically book passage well in advance, last-minute transits can be purchased through an auction, with average auction prices usually around $55,000.

This is not the first time exceptional fees have been paid. In April, a liquefied natural gas vessel paid $4 million to bypass the queue, highlighting the increasing demand for passage through the waterway, especially amid global supply chain concerns. The Panama Canal handles approximately 5% of global maritime trade.

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South Korean company SK Gas paid the record sum for the G Spirit to transit the shipping lane on Sep 1, two days before canal authorities reduce the number of transits due to the El Nino weather phenomenon.