Amid much fanfare the newly enlarged Panama Canal locks will open their gates to the first toll paying vessels on 26 June. A feat of engineering to be sure but one that will have limited impact on the tanker industry.
A recent briefing by brokers EA Gibson sets the opening in context. It states that historically, only about 5 per cent of all traffic transiting the canal are tankers and EA Gibson does not anticipate this figure changing significantly. The 49m maximum width of the new locks prohibits any tanker larger than a Suezmax from being physically able to transit. Furthermore, a Suezmax can only transit with a reduced draft. The economics of taking a part loaded Suezmax through the canal to discharge in the Far East will make most moves along this route arbitrage driven, given the distance and the transit fees.
The impact of the removal of the US ban on crude exports may well be minimal in the short term. There will not be any significant increases in crude exports while domestic production is falling. Some crude movements from the US Gulf to the Far East are possible. But the current low pricing of bunker fuel will also influence the decision whether to pay canal fees or sail via the Cape. US Gulf refiners may appear to benefit from the option to ship LR2 parcels to the west coast of Latin America via the canal, however port infrastructure is likely to see MRs remain the dominant players in the region. Similarly, the Jones Act will continue to limit product movements from the US Gulf to US West Coast.
In short, operators of container vessels, car carriers and VLGCs stand to benefit post 26 June. For mainstream tanker trades it is business as usual.