Shipping firms pay up to $4 million to reroute via Panama Canal due to Hormuz disruption

Shipping companies are paying as much as $4 million for last-minute transit slots through the Panama Canal as tensions linked to the Iran conflict disrupt the Strait of Hormuz, which is forcing a shift in global trade routes.

With regular bookings exhausted, firms are turning to high-cost auctions to secure faster passage and avoid delays caused by instability near Iran’s coast. The surge in rerouted cargo has driven unprecedented demand for canal crossings.

Typically, transit through the Panama Canal costs between $300,000 and $400,000, depending on vessel size. Companies seeking priority access previously paid an additional $250,000 to $300,000. That premium has now surged sharply, with average auction prices for expedited slots reaching about $425,000, and in some cases climbing into the millions.

Canal administrator Ricaurte Vásquez said the spike in fees is not due to congestion or a backlog of ships but reflects urgent last-minute route changes by operators responding to the effective disruption of the Strait of Hormuz.

The Panama Canal remains a key global trade route, handling shipments ranging from automotive parts and agricultural goods to consumer electronics between China, Europe, and the US East Coast. However, its size limits prevent it from fully replacing the Strait of Hormuz, particularly for large-scale petroleum transport.

The situation escalated after Iran’s Islamic Revolutionary Guard Corps seized the Panama-flagged container ship MSC Francesca, prompting condemnation from Panama’s foreign ministry. The ministry described the incident as an illegal act and a serious threat to maritime security, stating the vessel was diverted into Iranian waters while transiting the Strait of Hormuz.