Panama Canal tightens transit slots to 34 daily from Sept 3, 32 from Sept 15

The Analysis

Thirty-six, thirty-four, thirty-two. Three numbers, twelve days apart, from an authority that has told you exactly how much water it intends to ration. What it has not told you is which of your boxes will be the ones left on the quay.

The Panama Canal Authority cut daily transits from 36 to 34 slots on 3 September and takes them to 32 from 15 September. Neopanamax draft limits tightened to 48 feet and go to 47.5 feet on 1 October. Neopanamax capacity is capped at nine slots a day. US East Coast and all-water Asia-US routings get tighter space, and the surcharges that come with it are expected to hold through the peak season.

Two cuts, two different sets of customers, and one surcharge line that will be quoted to both of them. That is where the next thousand words go.

Begin with the percentages, because the percentages are being quoted loosely. Thirty-six to 34 is a fall of 5.6%. Thirty-four to 32 is a fall of 5.9%. Measured from the start of September to the middle of it, the daily slot count falls 11.1%. Those three numbers will end up in a procurement slide by Friday.

The denominator underneath them is the part worth arguing about. The notice puts the Neopanamax ceiling at nine slots a day and does not say the ceiling moved. Nine out of 32 is 28.1% of the daily total. If the ceiling held at nine while the total fell by four, then the four slots that disappeared came out of the Panamax locks, and the largest all-water ships lost no berths at all. A 13,000 TEU vessel on an Asia to US East Coast string does not lose a sailing from this notice. It loses half a foot of water.

Half a foot sounds like nothing until it is converted. A working figure for a ship in the 12,000 to 14,000 TEU range on this trade is 300 to 400 TEU of payload per foot of draft. Take 350. That coefficient is my assumption, not a figure from the notice. Half a foot is then about 175 TEU per transit. Nine Neopanamax transits a day at 175 TEU each is 1,575 TEU of payload a day that cannot be loaded. Over the first fortnight after 1 October, that is roughly 22,000 TEU. That is my arithmetic on my own assumption; the authority never published it.

The slot cut is larger in TEU terms. Four slots a day, on ships in the 4,000 to 5,000 TEU class, is a nominal 16,000 to 20,000 TEU of capacity a day before utilisation. The draft is the smaller number. It is also the one that touches the newest and most expensive ships on the water, which is why it will be the one that gets under-priced.

Here is the structural point. The authority is rationing one resource, water in the lock system, and it is charging for it in two currencies: slots and inches. A slot is countable. An inch of draft is not. The carrier then converts both into a third currency, dollars per box, and that conversion is performed by somebody who does not have to explain it to you.

So the figure on your invoice has passed through two conversions, each with its own error bar. The slot conversion is easy: four slots gone, divide the cost across the boxes that still move. The draft conversion is not, because it depends on the weight and stow of every booking on the vessel, which the carrier knows and you do not.

Exposure here is not sorted by company size. It is sorted by weight per TEU, and second by which coast you discharge on. Heavy cargo hits the draft wall first. Machinery, tile, paper, bagged resin, anything where the box runs out of weight before it runs out of cubic space, gets rolled at 47.5 feet in a way it did not at 48. The box is fine. The booking is fine. The kilos are the problem. A shipper moving the same value in flat-pack furniture will never see this cut.

All-water Asia to US East Coast importers carry both exposures: the payload ceiling on the way through, and the wait on either side of it. Importers who route to the West Coast and move inland by rail carry neither, which is why the all-water premium compresses in exactly this kind of month. That premium buys a service that is being quietly degraded, and the degradation is not in the transit time. It is in how much of your cargo makes the sailing.

The two dates create a kink in the booking calendar. The cut to 34 lands on 3 September. The cut to 32 lands on 15 September. A booking confirmed on 5 September for a sailing in the last week of the month sits inside that twelve-day window: quoted against a market that still has 34 slots, delivered into one that has 32. You buy scarcity at the price that prevailed before the scarcity was fully in force, which sounds like an advantage until the carrier invokes the space-at-time-of-loading clause and rolls you.

The draft change on 1 October arrives sixteen days after the slot floor. By then the October booking book is committed, so the payload loss gets discovered at the terminal rather than at the desk. That is the worst place to discover it, because your only two options at that point are leaving cargo behind or paying for a rebooking.

Now the part the coverage leaves out. Every story on this notice leads with 36 to 32, because slots are the only figure in the document that was written as a number. The draft limit was written in feet, and feet do not appear in a freight budget, so nobody converts them. Convert them and you get a second rationing channel priced into the same surcharge line as the first.

That matters because a single per-box surcharge sized on an average loss over-charges the customer whose loss sits below average and under-charges the one above it. The importer moving heavy cargo in a Neopanamax ship lost about 1% of payload. The importer moving light cargo in a Panamax-lock ship lost 11% of slots. Both will be handed the same number, and that number will be built on the slot story, because the slot story is the one with a figure attached. The heavy-cargo importer ends up paying for a berth shortage it is not causing, while the mid-size operator who genuinely is short of berths pays a rate built around a payload problem it does not have.

The second omission is the calendar. The notice carries no end date. A scarcity announcement with a start date and no end date is not a queue forecast. It is a floor, and floors are set by the party that benefits from them holding.

Run the counterfactual. Had the authority held 36 slots and cut only the draft, the queue would be shorter, the per-box surcharge smaller, and your heavy boxes would still be rolled. You would have traded a visible price for an invisible roll. Had it cut slots only, the big ships would sail full and the wait would grow on both sides of the locks. It chose both, which tells you the authority expects this to outlast one peak season. Two instruments used at once is a duration signal, not a volume signal.

The trap is modelling this as a transit-time problem. Transit time tells you when the box arrives. Payload tells you whether it gets on. Only one of those appears in a service contract, and it is not the one that binds in October.

Lock the payload. The rate you can still negotiate. The kilos you cannot.

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— By Vivian Zhao