Sixty days ago, paying $4 million for a single canal transit slot would have sounded like a mistake. Today, it’s a real number—and it’s happening right now. As the Iran war’s effective closure of the Strait of Hormuz generates a seismic shift in global transportation flows, businesses have spent as much as $4 million for last-minute transit slots through the Panama Canal, according to the Panama Canal Authority.

Read the full story from BNN Bloomberg here.

Transportation consultant Thomas Witt has been carefully observing how the Hormuz disruption is now reshaping freight costs at waterways thousands of miles away — and what it means for businesses moving goods internationally.

Why Panama Canal Prices Are Exploding

Under normal conditions, vessels book slots in advance and pay a flat transit fee of $300,000 to $400,000, depending on vessel size. Ships without reservations can bid for last-minute slots through an open auction system—historically a niche option, not a mainstream necessity.

Recently, that math has changed. The Panama Canal Authority confirmed that the average auction price for transit slots soared from $135,000 to $385,000 in April, a 185% increase.

Those are the averages. At the high end, the top auction price reached $1.7 million for a Panamax slot and $4 million for a Neopanamax slot, with the Canal Authority confirming that some vessels spent over $1 million at auction. Daily transits rose from 34 in January to 37 in March, with peak days now exceeding 40 transits. The auction system simply wasn’t built to absorb this kind of volume spike—and the pricing reflects it.

A Global Route Nobody Expected to Be This Busy

Here’s what makes this moment genuinely unusual. Crude cargoes do not typically flow from the Atlantic basin to Asia via the Panamax locks — but they do now. Asian buyers who normally source oil from the Middle East Gulf are being forced to look elsewhere, rerouting Atlantic basin cargoes through Panama instead. It’s a supply chain workaround that would have seemed impractical under any other circumstances.

One case captures the scale of the immediacy involved. A fuel vessel originally carrying shipments to Europe redirected mid-voyage to Singapore–and spent an extra $4 million to expedite its Panama Canal crossing because Singapore was running critically low on fuel. Container vessels and LPG carriers are seeing the largest volume increases at the canal, with average northbound wait times climbing from under one day to 4.8 days, and the longest current wait sitting at 15 days. 

What This Means for Shipping Costs Across the Board

The Panama Canal premiums are piling on to costs that were already rising. War risk insurance premiums, elevated fuel surcharges, and the additional transit time from rerouting around Africa’s Cape of Good Hope were already squeezing margins before auction prices spiked. Brent crude briefly broke $107 per barrel this week, up sharply from around $66 per barrel a year ago—and economists note that every dollar increase in oil prices raises the value of each cargo, which in turn justifies paying even more to move it faster.

The pressure is also surfacing in carrier fees. UPS added a Surge Emergency Fee on April 19, applying a $ 0.23-per-pound fee to most international shipments, with shipments from China and Hong Kong to the U.S. facing a $ 0.32-per-pound fee. And on April 21, DHL Group’s Chief Executive Officer warned publicly that sustained disruption in Gulf crude flows could push the global economy toward a tipping point—a considerable statement from a company with visibility into freight markets across more than 220 countries.

What Shippers Should Do Right Now

Thomas Witt is clear on one point: this is not simply an energy market story. Any business moving goods internationally is now operating in a freight cost environment that looks nothing like it did at the start of the year, and planning assumptions need to reflect that.

A few immediate priorities are worth acting on now.

• Book Panama Canal reservations as far in advance as possible. The auction system is not a reliable fallback when the average is $385,000 and the ceiling is $4 million.
• Audit current contracts for fuel surcharge clauses and force majeure provisions, particularly for shipments touching Middle East corridors.
• Build genuine lead time buffers into Q2 and Q3 planning; schedule dependability across both ocean and air freight is running below historical norms and isn’t likely to snap back quickly.
• Treat the elevated auction prices as the working baseline for now, not a temporary spike.
• Monitor the Hormuz situation at least weekly—any diplomatic resolution would shift capacity and pricing throughout global lanes relatively quickly.

The businesses absorbing these costs most successfully right now are the ones that started planning for disruption before it arrived. That window is still open, but it’s getting narrower.