In this week's “Shipping Number of the Week” from BIMCO, Shipping Analyst Filipe Gouveia examines the substantial impact of limited daily transits in the Panama Canal on the dry bulk market.

Between January and April 2024, transits decreased by 74% year-over-year, leading to a 31% year-over-year increase in sailing distances for affected routes, despite a 25% year-over-year decline in cargo volume.

“The limits in daily transits in the Panama Canal have significantly affected the dry bulk market, with transits down 74% y/y between January and April 2024. During this period, sailing distances for completed voyages in the affected routes rose 31% y/y, while the cargo volume dropped 25% y/y. Overall, tonne mile demand for these routes fell 1% y/y,” commented Filipe Gouveia, a shipping analyst at BIMCO.

Due to low water levels in Lake Gatun, restrictions have been imposed on the number of transits permitted through the Panama Canal, with a maximum draught level of 13.4 meters. Normally, between 34 and 38 ships traverse the canal daily at draught levels of 15.2 meters. At the beginning of the year, only 22 daily transits were allowed. However, by April, the number had increased to 27 transits, and it currently stands at 31 transits.

The dry bulk sector has felt the brunt of the reduced transits due to its market's unpredictable nature. Unlike container ships, which typically adhere to fixed schedules, bulk carriers face challenges in securing transit slots through the canal. Consequently, many dry bulk operators have opted to reroute their vessels, choosing to sail around the Cape of Good Hope or Cape Horn instead. This decision has led to longer sailing distances and increased demand in alternative routes.

“If sailing distances had not increased, the lower cargo volumes would have caused a 2% decrease in tonne mile demand for segments smaller than capesize. That would have been a significant downward pressure on freight rates for these segments and could have prevented the 20-30% y/y jump in the segments’ Baltic indices recorded between January and April,” added Gouveia.

The decline in cargo volumes during this period was primarily attributed to reduced grain shipments from the US to East Asia. China's increased grain purchases from Brazil, typically transported via the Cape of Good Hope route, contributed to this trend. Grains presently constitute 34% of the cargo passing through the Panama Canal, with the majority originating from the US.

Coal, steel, fertilizers, and petcoke are other significant dry bulk cargoes commonly traversing the Panama Canal. Despite the imposed restrictions, shipments of steel and fertilizer through the canal have largely maintained stability.

“The disruptions in the Panama Canal could soon come to an end, ahead of the maize and soya bean harvests in the US in September. On 1 June, the daily transits through the Panama Canal will increase yet again to 32 transits per day and the ongoing rainy season in Panama could lead to further increases. As conditions normalise and sailing distances shorten, we may see a decline in demand for ships on the affected routes,” explained Gouveia.

The three container shipping alliances are still short of 36 ships, or 10% of the required tonnage, to entirely fulfill their 25 Asia – Europe loops as of 10 May.

Despite record newbuilding deliveries this year, and 1.14 million TEUs delivered so far, the Red Sea crisis has soaked up all available tonnage.

Alphaliner’s report says, “Taking into account that the average vessel size on this trade currently stands at 14,150 TEUs, some 509,400 extra slots are still needed. This represents 9.6% of the total capacity required to guarantee weekly sailings for all alliance loops.”

On Sunday, a welcoming ceremony of a 10,000-ton vessel was held at the Lohuang Port of Chongqing /Southwest China/ as part of the first test voyage on the Zhoushan-Chongqing direct river-sea route, which is the first such route in the upper reaches of the Yangtze River.

The movement of ships through the Bosporus is temporarily not carried out due to the breakdown of a vessel in the northern part of the strait. This was reported by the General Directorate of the Turkish Coast Guard on its page in X.

“The 64-meter cargo vessel Brabus [Cameroon-flagged] had a steering device breakdown near the northern entrance to the Bosphorus Strait,. Movement of vessels on the Bosporus is temporarily stopped in both directions", - reported the agency.

A tugboat and a rescue boat were promptly sent to the vessel. After the Brabus is towed away from the line of traffic to a safe zone, the strait will be reopened to maritime traffic.

Four crewmen of a Chinese domestic cargo ship are missing after the vessel hit Jiujiang Bridge in Foshan in China's Guangdong province on 22 April.

The ship, whose name was not released, was carrying 4,900 tonnes of rolled steel along the Yangtze River from Fuzhou in Fujian province to Heshan in Guangdong province, when at 9.20 pm local time, it hit the base of one of the bridge pillars.

Built in 1988, Jiujiang Bridge forms part of the G240 National Highway connecting Foshan and Heshan.

Water started entering the cargo hold of the vessel, causing it to capsize. Seven of the 11 crew members were rescued, while the other four are missing.

After the incident, Foshan Municipal Party Committee Secretary Zheng Ke, Foshan Mayor Bai Tao, Guangdong Maritime Safety Administration Deputy Director Guo Weibin, among others, went to the scene to direct the rescue work.

At 6 am local time on 23 April, more than 300 police officers and maritime rescue personnel were deployed to search for the missing seafarers, without success. The search and rescue operations are still ongoing, and to facilitate the search, other ships are prohibited from entering the waters 3km upstream and downstream from Jiujiang Bridge.

Civil engineering experts examined the bridge and found no serious damage to its main structure but the base of the pillar, designed to withstand allisions, had scratches, and further appraisal of the bridge's structural safety was required.

In June 2007, a sand carrier hit Jiujiang Bridge, causing a 200m stretch of the bridge to collapse. Four cars on the highway, along with two construction workers, fell into the river below, killing eight persons.