Ships Are Paying Millions to Skip the Line at the Panama Canal

Japan’s Eneos Group set a new record by paying nearly $4 million to secure priority passage through the congested Panama Canal. 

The company paid $3.975 million in an auction, surpassing previous payments for expedited crossings. Eneos, a major player in transporting commodities such as crude oil, liquefied petroleum gas, chemicals, and bulk cargo, did not provide any comments on the transaction.

The Panama Canal has been experiencing increased congestion due to a growing queue of ships, exacerbated by a prolonged drought. The canal’s managing authority has implemented severe restrictions to manage the situation, leading to a surge in demand for priority access, marked by regular auctions.

Related: Historically Low Water Levels at Panama Canal Drive Gas Carrier Rates to Record Peaks

As the canal faces challenges with water supply and climate change-related issues, discussions about alternative routes have resurfaced. A century-old debate about a canal through Nicaragua has gained attention, with some experts suggesting its technical feasibility. 

However, obstacles such as longer distances and potential environmental consequences pose significant challenges. Estimates indicate a cost exceeding $40 billion to construct a Nicaraguan Canal, a project that would require a steady flow of ships over the years to generate income for investors.

While some attempts were made in the past, including a 2013 agreement between a Chinese firm, HKND, and the Nicaraguan government, progress has been elusive. Environmental concerns, resistance from local communities, and doubts about the government’s commitment have prevented the realization of what would have been a decades-long megaproject.

Despite these hurdles, Nicaraguan officials assert that the canal project has not been abandoned. However, skepticism remains, Michelle Wiese Bockmann, senior analyst at global maritime trade experts Lloyd’s List Intelligence, has dismissed the idea as “absolute rubbish” in a BBC story due to the lack of tangible progress over the years.

Information for this story was found via the BBC, Fortune, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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