As the war over access to the Strait of Hormuz disrupts global shipping, some cargo owners are turning to Panama’s canal for a fast alternative—even if the price rises sharply. The Panama Canal Authority said businesses have paid as much as $4 million for last-minute plans to move boats through the waterway in recent weeks, according to the authority’s account of the surge in expedited demand.
Under normal arrangements, companies secure passage through the Panama Canal through reservations set at a flat rate. But businesses without bookings can instead bid in an auction that awards slots to the highest bidders, and the canal’s auction mechanism has become a focal point for companies scrambling to reroute shipments or buy cargoes from alternative origins to avoid the disrupted shipping lane off Iran’s coast.
Rodrigo Noriega, a lawyer and analyst in Panama City, said companies are paying more to cross through the canal because the Strait of Hormuz has become increasingly dangerous and expensive to navigate. “With all the bombings, the missiles, the drones … companies are saying it’s safer and less expensive to cross through the Panama Canal,” he said, adding that “All of this is affecting global supply chains.” Noriega also said Panama’s government is working to maximize what it can earn from the canal.
The canal administrator, Ricaurte Vásquez, said the average price to cross depends on vessel characteristics and has been rising for urgent cases. The average price for passage ranges between $300,000 and $400,000 depending on the vessel, and companies that previously wanted an earlier crossing would pay an additional $250,000 to $300,000. In recent weeks, the additional cost to expedite passage has jumped to around $425,000, Vásquez said.
Vásquez described how the fee increases are tied to last-minute decisions and urgency rather than physical congestion at the canal. He said the extra fees are high because vessels face shifting requirements and time pressure amid broader trade chaos, and that companies decide how high to bid. He also gave examples, including one unnamed company that paid an extra $4 million when a fuel vessel had to change its destination because of geopolitical tensions, as the ship was redirected to Singapore to meet fuel needs.
He said other oil companies paid more than $3 million on top of the crossing fee to accelerate passage as oil prices surged. Noriega said nobody expected the war to have “quite so much effect on global trade,” while Vásquez suggested the higher auction prices could persist if the conflict stretches on.
The canal’s brisk business comes as Panama confronts security and diplomatic fallout tied to the same Middle East bottleneck. Panama’s foreign ministry accused Iran of illegally seizing a Panama-flagged vessel, MSC Francesca, from an Italian company in the Strait of Hormuz. The ministry said the ship was “forcibly taken” and added that it was “a serious attack on maritime security” that constitutes unnecessary escalation as the international community urges the Strait of Hormuz to remain open to navigation “without threats or coercion of any kind,” though it was not immediately clear whether the vessel remained in Iranian custody.