Korean LPG Carrier Sets Record With $5.3M Panama Canal Slot Auction
For the second time in a month, a South Korean shipowner has set a new record for the highest transit fee ever paid for a Panama Canal booking slot. Both records were set for the purpose of moving an LPG carrier to a loading terminal on the Houston Ship Channel.
Bloomberg reports that SK Gas, the LPG trading arm of SK Group, has paid $5.3 million for the right to move one ship through the locks on September 1. Without the extra payment, the ship would still get to transit, but would have to wait for up to 11 days given current delays.
The vessel in question, G. Spirit, is currently on the eastbound leg of its ordinary route. Since at least 2025, G. Spirit has loaded LPG at the Houston Enterprise dock on the Houston Ship Channel and carried it to customers in East Asia, calling in China, South Korea and Japan. It transits the canal on almost all voyages to and from. The vessel is currently at anchor off Panama City, awaiting its usual northbound transit - but this time, at tremendous cost.
Earlier this month, SK Shipping - a former sister company of SK Gas, now owned by private equity firm Hahn & Co. - paid a record $4.6 million to buy a Panama Canal transit slot. Its purpose was to move a nearly identical gas carrier, G. Arete, to the same Houston terminal. Like G. Spirit, G. Arete is on the same long-term rotation between the Enterprise terminal and East Asia.
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The outsize transit fees for Korean LPG interests are driven by two constraints: first, the conflict in the Strait of Hormuz has cut down the volume of energy shipments to Asia from the Arabian Gulf, leading to soaring LPG prices. In South Korea, the government has suspended LPG import tariffs and has leaned on wholesalers to keep prices in check for blue-collar consumers - driving loss-making sales for SK Gas, according to Chosun. An industry executive told the outlet that gas traders have to make up these losses by pursuing other, more profitable ventures on the global market.
Second, the El Nino-powered drought at the Panama Canal has reduced the maximum allowable draft and (starting September 3) the maximum daily number of transits. The combination of elevated traffic and reduced capacity has driven up transit slot auction bidding and prompted the canal's management to take measures to ensure fairness.