Industry Note No. 6 - Panama Canal Expansion

Suezmax cargoes originating in the Caribbean (Colombia, Venezuela) with discharge in the Far East are examples of candidates for transiting the canal; however, key considerations including loadable quantity restrictions and Panama Canal costs will likely offset the benefit from the shortening of distances using current East-bound routing options for these trades. In this note, we evaluate the voyage economics pertaining to these trades for the year 2016. The basis of our analysis will be the calculation of the cost per barrel for loadings transiting through the canal compared to those routing through the open-seas.