Trump’s Panama Canal remarks spark speculation in dry bulk trade

Focusing on bulk carriers, which ranked as the second-largest users of the Canal in 2023 and fourth in 2024, according to the Panama Canal Authority’s data, BRS Shipbrokers recently analysed the situation, noting future negotiations between the US and Panama could emerge.

“Given Donald Trump’s penchant for unconventional dealmaking, there is potential for future negotiations to establish a toll agreement that favours US trade – including dry bulk shipments – different from the existing fee structure, thereby easing tensions,” analysts noted.

According to BRS Shipbrokers, since July 2022, Panama Canal transit fees have been calculated using three components: a fixed rate based on the lock system (Panamax or neo-Panamax), a fee determined by vessel size, using the Panama Canal Universal Measurement System, and a variable charge tied to market conditions.

“For the sake of discussion, if the US manages to secure a significant say in the Canal’s operations in the foreseeable future, it could serve as another tool in their diplomatic leverage,” BRS Shipbrokers added.

Bulk carrier transits through the Canal fell by 52% in 2024 compared with the previous year, the largest drop among shipping sectors apart from LNG carriers, which experienced a decline of around 65%, according to the Panama Canal Authority.

China in the spotlight

In his inaugural speech, President Trump took aim at China when discussing the Panama Canal, claiming, “China is operating the Panama Canal, and we didn’t give it to China; we gave it to Panama, and we’re taking it back."

His remarks appear to reference Hong Kong-based Hutchison Ports, which manages the ports of Balboa on the Pacific side and Cristobal on the Atlantic entrance of the Canal. Notably, Reuters reported on 21 January that Panama authorities launched an audit of the Hong Kong-based port operator.

Analysts suggest this development fits into the broader narrative of US-China tensions and ongoing tariff disputes that have escalated since President Trump’s re-election was confirmed.

BRS Shipbrokers pointed out that unlike in 2017, when President Trump was a newcomer to international politics, global leaders now have experience in countering his policies. Moreover, the US President is now in a stronger position to implement his agenda, with a team hand-picked by him and Republican majorities in both the Senate and Congress, the analysts added.

Trade dynamics

Amid these geopolitical developments, BRS Shipbrokers analysts predict a scenario where China might unexpectedly increase purchases of US grains. Such a move could reflect a strategic decision to avoid testing the limits of President Trump’s second term. “This shift would disrupt the dynamics for sub-cape vessels in the North and South Atlantic regions,” analysts observed.

Chief executive of dry bulk specialists Seanergy Maritime Holdings and United Maritime Holdings, Stamatis Tsantanis, has highlighted that in 2022, US soya bean exports to China reached a record US$16.4Bn. However, tariffs have since redirected trade flows, with Brazilian and Argentine grains increasingly replacing US exports.

“Brazil exported 74M tonnes of grain to China in 2023, compared with 26M tonnes from the US,” Mr Tsantanis has noted, underlining the significant shift in global grain trade patterns.