VLGC capacity is being taken out of the market due to increasing inefficiencies and delays at the Panama Canal.

Oslo-listed VLGC owner Avance Gas said waiting times in the second quarter averaged 6.5 days northbound and 5.25 days southbound.

After averaging 10.5 days northbound and eight days southbound through April, delays were muted in May, averaging 2.5 days for northern trips and 2.1 days to the south, the owner reported.

Delays then increased in June.

Panama has been hampered by a long period of drought from May which has severely affected water levels in Gatun Lake, from which fresh water is released to the canal and through the locks.

This has forced the canal authority ACP to impose draft restrictions and cut the number of transits.

“Although the draft restrictions imposed have not had a direct effect on VLGCs, the measures have created a lot of disturbances in the booking system,” Avance Gas said.

Trips through the old panamax locks have been reduced by as many as 10 per day.

From the end of July, the one or two daily slots through the neo-panamax locks reserved for unbooked vessels have been auctioned out to the highest bidder.

This makes “scheduling a VLGC through Panama with insufficient customer ranking (i.e. top 15) a very costly exercise,” Avance Gas said.

Significant increase in August

“Delays … have increased significantly so far through August, not only for neo-panamaxes but also for those of the old panamax locks, often even surpassing those of the neo-locks, which is highly unusual,” the shipowner added.

Last year owners were paying $2m for a slot in auctions.

Avance Gas expects VLGC rates to be in the “high $50,000s” per day for the rest of the year, up from the mid-$50,000 per day range in the first six months.