Supply Chain Action Points
Read this first — the conclusion, and the moves to make:
- Re-price every US East and Gulf Coast lane at $200 to $640 per FEU, which is the quoted $100 to $320 per TEU doubled for 40ft equipment, and get the corrected figure into the September freight budget before the 15 September slot cut.
- Get the Panama surcharge classified in writing as inside or outside every service contract before 15 September; any contract where an all-in rate carries an external surcharge line goes to renegotiation rather than renewal, and a 3.2 times spread is the evidence you bring.
- Consolidate to the lowest-surcharge carrier on any lane where 60% of monthly volume can move in a single booking; on 40 FEU a month the $320 to $100 gap is $17,600 a month and $211,200 annualised.
- Flag every SKU above 20 tonnes per FEU as gauge-exposed and move 50% of that tonnage to a routing that does not depend on 47.5 ft, with the decision made by 15 September rather than after the first roll at the gate.
- Put the draft figure on the weekly watch list instead of the slot count; the draft has moved twice in eight days while slots have moved once, and a further print below 47.5 ft is the trigger for the next surcharge round.
The Panama Canal Authority has tightened restrictions as rainfall stays short. The Neopanamax maximum draft fell to 47.5 ft on Sep 3 (after 48 ft on Aug 26), and daily transit slots drop from 34 (Sep 4) to 32 (Sep 15). MSC, CMA CGM and Hapag-Lloyd have each added Panama surcharges of $100-$320/TEU on East and Gulf Coast cargo. Shippers face longer lead times and higher costs on the critical US-Asia corridor.
The Analysis
Six inches. That is what separates 48 feet from 47.5 feet, and it is the only number in this Panama story that nobody has converted into something a shipper can spend.
The Panama Canal Authority cut the Neopanamax maximum draft to 47.5 ft on 3 September, eight days after it went to 48 ft on 26 August. Daily transit slots go from 34 on 4 September to 32 on 15 September. MSC, CMA CGM and Hapag-Lloyd have each added a Panama surcharge of $100 to $320 per TEU on US East and Gulf Coast cargo. The stated reason is rainfall that has not arrived.
Three numbers, three different units, and one invoice at the end of it. I want to take them apart in the order they will reach your payables desk, which is not the order they were announced.
Start with the slot count, because that is the one that got quoted. 34 to 32 is two a day, 14 a week, 5.88%. The arithmetic is right. It also describes the least important of the three numbers, because a slot is a permission to transit, not a quantity of cargo. Two fewer permissions a day is a queue. A shallower canal is a smaller ship.
The draft is the number that binds, and it binds on weight rather than on boxes. A Neopanamax at 48 ft and the same hull at 47.5 ft have identical deck plans and different tonnages. Half a foot of draft on a vessel of that class is on the order of a thousand tonnes of deadweight, and that is my assumption, not a figure from the authority. I have not modelled the hull and I will not pretend to three decimal places. What survives the assumption is the direction. The draft cut removes tonnes from inside every slot before it removes a single slot.
That distinction sorts shippers into two groups faster than any segmentation slide ever did. Dense cargo feels it first: ceramics, machinery, steel, bagged resin, paper. Light cargo barely feels it: apparel, foam, flat-pack furniture, anything that cubes out long before it weighs out. Two shippers on the same vessel, the same 14 fewer transits a week, opposite exposures. One is being told to leave tonnage at the terminal. The other is being told to bring less volume. The coverage wrote a single story for both of them.
Now multiply, because capacity is slots times tonnes per slot. Slots are down 5.88%. Tonnes per slot are also down. The product is worse than 5.88%, and only one of the two multipliers made the headline. That is the first silent multiplier, and it is the reason a shipper who budgets on the published slot cut will come in short on cost and short on space at the same time.
Here is the second silent multiplier, and it is arithmetic nobody in the coverage did. The surcharge is quoted per TEU. If you ship 40ft you pay two TEU. So $100 to $320 per TEU is $200 to $640 per FEU. The spread between the cheapest and the dearest carrier on identical water, the same canal, the same drought and the same week is $440 per FEU. That is a factor of 3.2. Not one summary I read multiplied by two. Not one asked why three carriers on the same route need spreads that far apart.
A surcharge of that width is not a cost recovery with a modest margin on top. It is a rate instrument wearing a cost story. Three carriers carry three contract books, and those books were filled at different times at different levels. The carrier with the most volume already sold forward at levels it now regrets needs the widest surcharge to make its own arithmetic close. That is my reading of the spread, not their announcement, and I would want to see the contract book before defending it in a meeting.
Who gets hurt, and how hard, is decided by one clause rather than by company size. If your service contract is all-in and the Panama surcharge sits outside it, it was never all-in; it was a base rate with a variable you did not price. A mid-sized importer with a genuinely closed all-in contract is in a better position this month than a large one whose contract has an open surcharge line and a force majeure reference nobody read. The second group is where the arguments will happen in October, and they will happen after the cargo has sailed.
East coast against Gulf is the second layer, and I will only flag it because the release gives me no figure for it. The same $100 to $320 band is quoted across both. Gulf cargo has one more inland leg behind the port, and an inland leg is where a canal delay stops being a canal delay and becomes a missed rail appointment with a rebooking fee attached. I have no number for that compounding and I am not going to invent one.
Timing is the useful part, because the sequence itself is a signal. The draft moved on 26 August and again on 3 September. The slots move on 15 September. Draft first, slots second, and the gap is 12 days. Twelve days is one booking cycle. If you are building a trigger, build it on the draft print rather than the slot count, because the draft is the leading indicator and it hands you a full booking cycle of warning that the slot count never will.
The part the wire copy skipped is the ordering of the announcements, and it is worth more than the levels. The surcharges were announced after the draft was cut and before the slots were cut. A carrier that expects the restriction to keep tightening prices its surcharge at where it thinks the draft is going, not at where the draft is today. Which means the $320 is not a forecast of the cost of this drought. It is a premium on the possibility of a worse one, and you are the one writing that option. Nobody sends you a note when the option expires worthless. You just pay it, month after month, because the clause renews and nobody reopens it.
Run it the other way and see what the exposure actually is. Do nothing, book at declared weight, accept the surcharge as invoiced. If your cargo is dense you do not get cancelled; you get rolled at the gauge, which is worse for planning, because you keep the slot on paper and lose the week in practice. You also find out at the gate, after the trucking is paid and the cutoff has passed. That is the version of this that costs the most and appears in no index anywhere.
The small account, then. Forty FEU a month to the US East Coast at an average 18 tonnes per FEU is my assumption, not a figure from the source. At the top of the band, $320 per TEU is $640 per FEU, so $25,600 a month. At the bottom, $100 per TEU is $200 per FEU, so $8,000 a month. The gap is $17,600 a month and $211,200 a year, on identical water, an identical canal and an identical absence of rain. That gap is not a freight cost. It is the price of never asking which carrier's contract book is the fullest.
None of this says rates are high. Two hundred dollars on a box is not a crisis, and $440 between carriers is not a scandal. What it says is narrower and more useful. You are being quoted a range that varies by 3.2 times for the same service, and the range, not the level, is the part still open for discussion.
The line I would draw sits on the draft, not on the rate. If the announced draft falls again before the slot count does, the next surcharge round is already priced and you are already late. Lock absolute per-FEU numbers at signature and never a percentage of a base the carrier can restate in a circular. If 47.0 ft prints, treat the following surcharge as invoiced whether or not the notice has landed in your inbox.
The canal is short of water. Your contract should not be short of a ceiling. Six inches of water and a 3.2 times spread, and only one of those is weather.
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