Companies are paying millions to cross Panama Canal during Strait of Hormuz chokehold
Summary
Companies have paid up to $4 million to move ships quickly through the Panama Canal due to delays caused by the closure of the Strait of Hormuz amid tensions between Iran and the United States. This has led to increased demand for canal slots and higher prices, as businesses try to avoid risks and delays in global shipping routes.Key Facts
- The Panama Canal Authority reported some companies paid as much as $4 million for last-minute passage through the canal.
- The Strait of Hormuz, a crucial shipping route, is effectively closed due to conflict between Iran and the U.S.
- Ships without reservations can bid in an auction to secure passage through the Panama Canal faster.
- The average cost for crossing the canal is $300,000 to $400,000, with extra fees jumping from $250,000–300,000 to about $425,000 recently.
- About 6% of global trade passes through the Panama Canal, including goods like car parts, grain, and electronics.
- Some companies redirected ships to other destinations and paid high fees to speed up shipments, such as one fuel vessel redirected to Singapore.
- Panama’s government is earning more from these higher fees amid changing global trade patterns.
- Panama accused Iran of seizing a Panama-flagged ship, MSC Francesca, in the Strait of Hormuz, calling it an illegal act that threatens maritime security.
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