The Iranian conflict has almost paralyzed the Strait of Hormuz, pushing fuel prices and sea transport costs to skyrocket, while the Panama Canal is witnessing an increase in the number of ships passing by compared to normal.
The canal connecting the Atlantic Ocean with the Pacific Ocean at a narrow location between North America and Central America is recording a "slight increase" in the number of trains passing by, according to Deputy Director of the Panama Canal Ilya Espino de Marotta.
The latest thing we have recorded is that the number of shuttle ships has increased, although only slightly. In the context of rising fuel prices, the Panama Canal has become a more attractive route because of its shorter distance" - Ms. Espino de Marotta shared.
The Panama Canal is about 80km long, less than half of the 193km length of the Suez Canal in Egypt.
Ms. Espino de Marotta added that thanks to this year's dry season with unusually high rainfall, "we can handle 40-41 train trips per day compared to the normal level of about 36 trips".
The number of ships passing through the Panama Canal has increased particularly significantly compared to the severe drought that Panama recorded during El Nino in 2023-2024.
The Panama Canal actually operates like a giant "water elevator": the ship is lifted or lowered through the dock system by adjusting the water level at each point.
However, during El Nino, drought caused the water level of Lake Gatun - the lake that supplies water to the Panama Canal - to fall to a record low, forcing the number of train trips through the canal to decrease from 36 trips/day to 24 trips.
Maintaining 41-42 flights per day cannot last long, but we can stabilize at about 38 flights per day, enough to meet the needs of the transportation industry" - the leader of the Panama Canal emphasized.
When asked about the new target customers of the canal, she said there were no accurate data. "Of course, they are using us as a replacement route for the previous transport route," she said.
Although the Middle East energy market is often associated with oil, liquefied natural gas (LNG) also accounts for a large proportion of the fuel passing through the Strait of Hormuz. According to the US Energy Information Administration, about 1/5 of global LNG trade passes through this strategic sea route near Iran.
When the conflict in Iran paralyzed the Strait of Hormuz, US LNG freight rates increased 4 times. Meanwhile, Asia became a new consumption center as countries in the region frantically sought alternative energy sources.
About 80% of Asia's fuel passes through the Strait of Hormuz. Since the Iran conflict broke out, at least 4 US LNG shipments have changed direction to Asia instead of reaching ports in Europe as initially planned.
Regarding the possibility of Asian customers using the Panama Canal to transport LNG, Ms. Espino de Marotta said that the canal may receive more such shipments.
She noted that Russia is currently in a state of tension with Europe due to the conflict in Ukraine, "therefore, economically, the US is still more beneficial if it transports LNG from the US East Coast to Europe".
However, as the Iranian conflict continues to escalate and the Strait of Hormuz is still restricted to ships, the Panama Canal Authority believes that this transport route is ready to receive more world fuel sources.
