US grain shipments to Asia face delays + higher costs due to Panama Canal drought

US Grain shipments are getting costlier and slower amid Panama Canal drought: Bulk grain shippers transporting cargoes from the US Gulf Coast to Asia are sailing longer routes, and paying heftier freight costs in a bid to avoid vessel congestion, and record-high transit fees in the Panama Canal, Reuters cites traders and analysts as saying. The complications are coming at peak export season and increase the risk that the US will cede additional market share to competitors such as Brazil. Restrictions at the drought-hit canal could continue well into 2024, before the region’s wet season begins to normalize shipping via the artery, the newswire wrote.

Grain bulk carriers are getting pushed to the back of the line: Unlike cruise and container ships, which book slots months in advance, grain ships only seek slots days ahead of their transit, pushing them to the back of queues. Available slots are auctioned off, with some slots being sold for up to USD 1 mn, “untenable costs for the traditionally thin-margin grain trading business,” the newswire wrote.

Background: Drought in the Panama Canal has placed significant limits on the number of vessels transiting through the waterway, with auctions being held for queue jumping.