The Panama Canal is expanding its long-term capacity allocation program to the Panamax locks for the first time. This action is intended to provide greater assurance to customers during the upcoming dry season.
Details of the New LoTSA Program
The new long-term capacity allocation program, or LoTSA, will run from January 3 to April 3, 2027. This program will include the Neopanamax system that previously existed and will be implemented alongside a new pilot for Panamax.
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For Neopanamax vessels, 36 packages including 270 navigational capacities will be offered, divided into 165 northern routes and 105 southern routes. The Panamax pilot will also provide 51 packages and 288 capacities, which will be distributed approximately with three passages per day. The allocation of these capacities will be conducted through closed auctions in November.
Background and Context for the Need for Changes
This move is based on a system introduced for larger locks in 2024, when Panama Canal officials began offering future reservation blocks to customers to provide greater assurance in planning, especially following severe droughts in 2023-2024. The need for this assurance has increased this year.
Reports indicate that Neopanamax auction prices surged to a maximum of $4 million in May, while disruptions in the Middle East have led to more U.S. energy shipments rerouting through Panama. By August, an LPG carrier paid a record $5.3 million for priority passage, while adverse water conditions and high demand have put pressure on capacity.
The Panama Canal reduced daily reserved capacity to 32 vessels after rainfall failed to meet expectations and tightened depth restrictions, but recent rains have allowed some of these restrictions to be eased again.
The LoTSA program will not replace existing reservation and auction systems, and remaining capacity will still be sold through these two methods.
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