A severe drought at the Panama Canal that has limited crossings to ships with pre-booked slots is forcing many vessels to wait days for a reservation or sail around Chile’s Cape Horn to get to their destinations.
Navigator Holdings, an owner and operator of 55 gas carriers, views this as a good thing because the booking requirement has cut the canal’s capacity in half, thus raising demand for handysize gas carriers.
“We’ve seen some examples of that where the rates are high because there’s little availability of ethylene or ethane-capable vessels in the spot market. So that is an immediate positive impact,” chief commercial officer Oeyvind Lindeman said on Tuesday during an earnings call with analysts.
The canal situation will lead to longer sailings on the ethylene trade in particular that will do their part to tighten the overall gas carrier market, he said.
“Longer voyages will be a result, which is generally good for shipping and also good for Navigator.”
So far this year, Navigator has scheduled nearly 100 transits through the canal’s old locks, with an average voyage time of just over two days for carriers that are either ballasting or laden, he said.
The booking requirement will increase the duration of voyages from US to Asia, chief executive Mads Peter Zacho said during the call.
“This, in turn, will impact tonnage availability and likely our utilisation in a positive way.”
Fleet utilisation during the third quarter reached 93.4%, up from 84.9% during the same period last year.
As previously reported in TradeWinds, Navigator reported $19.1m in net income for the quarter, up from $2.4m in net income a year earlier.
