Korean vessel pays record canal fee as El Niño increases freight rates
SK Gas paid a record $5.7 million for a Panama Canal transit slot to secure U.S. liquefied petroleum gas supplies as an El Niño-driven drought cuts vessel traffic.
A container ship transits the Miraflores Locks of the Panama Canal, amid declining water levels due to a lack of rainfall linked to El Niño, in Panama City, Panama, on Sept. 4.REUTERS/YONHAP
SK Gas paid a record $5.7 million to move a liquefied petroleum gas (LPG) tanker through the Panama Canal last week, as worsening drought and surging cargo traffic drove up the cost of passage. The drought is being fueled by El Niño, a periodic warming of Pacific Ocean waters that disrupts weather patterns worldwide and is currently intensifying toward historic strength.
“We purchased an expedited transit slot to ensure a stable supply of LPG imported from the United States to Korea as part of our efforts to strengthen energy security,” an SK Gas spokesperson said.
The soaring cost comes as drought has lowered water levels in the canal, which forced authorities to restrict vessel traffic.
The Panama Canal Authority plans to cut the daily number of vessels passing through by more than 10 percent starting Thursday. The measure is intended to prepare for further declines in water levels caused by El Niño, according to the BBC and Al Jazeera.
In the canal area, rainfall from May to August is down 34 percent from its historical average, the authority said. It noted that El Niño could cut it even more.
The Iran war has also sent more cargo through the Panama Canal. As a result, competition for limited transit slots has intensified. Auction prices averaged $55,000 from October through February but have recently tripled.
Sea surface temperatures in the eastern Pacific are significantly higher than normal as El Niño continues to strengthen, as shown in this image of the globe.C3S/ECMWF
The El Niño behind Panama’s severe drought is continuing to intensify.
Sea surface temperatures across the Pacific region monitored for El Niño were 2.6 degrees Celsius (4.68 degrees Fahrenheit) above normal from Aug. 23 to 29, according to the World Meteorological Organization (WMO). Below the surface, temperatures in some areas soared more than 8 degrees Celsius above normal.
The WMO expects El Niño to reach “very strong” levels before the end of this year and persist until at least February next year.
“That [Pacific] ocean region is forecast to surge more than 3 degrees Celsius above average in the coming weeks, making this El Niño the strongest on record by this measure,” meteorologist Ben Noll wrote in The Washington Post.
El Niño occurs when ocean temperatures near the equator in the Pacific rise above normal levels. The stronger it becomes, the more heat it adds to global temperatures and the greater its potential to trigger extreme weather worldwide.
The simultaneous formation of three hurricanes in the eastern Pacific has also been driven largely by sharply higher sea surface temperatures associated with El Niño.
Three hurricanes developing in the Pacific regionCIRA/NOAA
“We are already seeing disruption and devastation from droughts and floods, and we expect these impacts to increase as El Niño intensifies.”
Concerns that El Niño could fuel climate-driven inflation are also beginning to materialize.
The Food Price Index reached 133.3 in August, its highest level since November 2022, when it stood at 135.7, according to the Food and Agriculture Organization (FAO). Its Sugar Price Index jumped 11.9 percent from the previous month amid growing concerns that El Niño could hurt harvests in major sugar-producing countries across Asia.
“August’s increase in global food prices is a warning that the risk premium is returning to food markets: climate shocks, geopolitical tensions and disrupted trade logistics are converging to tighten supply expectations, showing that resilience, open trade and secure input flows are now central to global food-price stability,” said FAO chief economist Maximo Torero.
El Niño also directly affects Korea’s weather in the fall and winter, although its effects can vary significantly by season.
El Niño tends to bring drier weather to Korea in September, which can worsen drought. By late fall, however, rainfall is more likely to rise above seasonal averages. Winters tend to be warmer and bring more rain and snow.
“In past years when a super El Niño developed, November rainfall was more than double the seasonal average,” said Kug Jong-seong, professor at Seoul National University’s School of Earth and Environmental Sciences.
“But its effects on the Korean Peninsula vary by season, so we need to understand better and study those seasonal effects.”
BY CHON KWON-PIL [lee.soojung1@joongang.co.kr]
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
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