VLGC owners are finding it tougher and tougher to schedule voyages through the Panama Canal.
Norway’s Avance Gas says waiting times at the vital link between the Atlantic and Pacific are becoming “increasingly volatile”.
Delays there have decreased significantly from the fourth quarter of 2022. The average waiting time northbound was seven days during the first quarter.
Despite this, January saw a high of 35% of vessels ballasting back to the US coming via the Suez Canal or Cape of Good Hope, higher than the figure for the final three months of 30%, the Oslo-listed company said.
“This is clearly a result of owners deciding to sail the long way around … to secure laycan for cargoes in the US Gulf,” Avance Gas added.
The percentage has since come off, ending the quarter at 11%.
“Delays are likely to be a considerable source of inefficiency for the foreseeable future, albeit with a seasonal variance,” the shipowner said.
Already so far in the second quarter, the monthly average of northbound delays sits at 12 days.
“While trying to forecast delays, waiting time at Panama Canal is becoming increasingly volatile making it difficult to schedule the ships for voyages,” Avance Gas added.
This, together with higher canal fees, is incentivising owners to avoid the canal, the company argues.
Avance Gas has also said there has been “significant slippage” of new VLGC deliveries.
Remarkable rates
“Given the substantial number of newbuildings scheduled for delivery this year, 2023 has been remarkable so far with freight rates outpacing most expectations,” the company said.
Yards were scheduled to hand over 16 VLGCs in the first quarter, but only 12 joined the global fleet.
This puts slippage at 25%.
This factor, coupled with strong export growth, a supportive LPG price arbitrage due to low gas prices in the US and resilient demand from Asia, has kept freight markets at strong levels.
The orderbook currently consists of 73 ships, a ratio of 20% to the existing fleet.
Slippage is also expected to push some of the remaining scheduled 2023 deliveries into 2024, Avance Gas believes.
Owners ordered 17 VLGCs during the January to March period, half of which were 88,000-cbm panamax designs to fit the old locks while transiting the Panama Canal.
