Feature: Mexico port delays tighten Gulf tanker supply, sharply boosting freight rates

Americas spot clean tanker freight rates are up 27%-80% since the start of February, depending on the route, due to the tight availability of ships on the US Gulf Coast and exacerbated by port congestion in the region and discharge delays in East Coast Mexico.

While the average wait time for USGC cargoes to discharge at the Mexican ports of Tuxpan and Pajaritos stood Feb. 18 at four days, it was as high as eight days on Feb. 14, a shipbroker said. The ships may not be able to discharge because of a lack of space in onshore storage, he added.

Shipowners typically factor in discharge delays of two-three days for spot voyages to East Coast Mexico. Poor weather in the region may also be a factor in the congestion, a logistics source in Mexico said.

"That's nothing new there -- they always have ullage delays throughout the year," a Latin America shipping source said. "But, yes, right now that's the case in Mexico."

Mexican state Pemex did not immediately respond to request for a comment on storage capacity in East Coast Mexico.

Mexico is by far the largest destination for US products, mainly from the US Gulf Coast. US Energy Information Administration data shows roughly four cargoes daily of US gasoline, diesel, jet fuel, propane and other products deliver into Mexico.

Five Medium Range tankers, totaling 244,316 DWT, were shown anchored outside of Pajaritos since Feb. 11-17, according to Platts cFlow trade-flow analytics software from Feb. 18. In Tuxpan, eight MRs totaling 397,298 DWT were shown waiting for discharge, with the earliest arrived and anchored on Jan. 26 and the latest on Feb. 17. Should the MRs all be laden with full 38,000 mt cargoes of gasoline, the combined products would total roughly 4,298,000 barrels.

Freight strengthening

Infrastructural delays have slowly whittled down available tonnage in the USGC loading region in February while cargoes exporting from the USGC have increased in number. Shipowners have taken advantage of the tightened supply, boosting spot freight rates on most USGC-loading MR routes.

Freight on the short-haul USGC-East Coast Mexico route has increased 80% since the start of February, last assessed at lump sum $450,000 on Feb. 17 from $250,000 on Feb. 1. On the longer-haul voyages to Brazil and Chile, freight has increased 40% and 27%, respectively, month to date. Freight on the 38,000 mt USGC-Brazil route was last assessed at w175 on Feb. 17, up from w125 Feb. 1. On the USGC-Chile run, rates last settled at lump sum $1.65 million on Feb. 17, up from lump sum $1.3 million on Feb. 1.

Additional delays at the Panama Canal have also contributed to tight supply in the Atlantic Basin, with delays for transit peaking Feb. 1 at 12 days for southbound transit. Delays at the Panama Canal have eased since, standing at six days for southbound transit on Feb. 18.

Shipowners are hopeful that continued cargo supply and tight tonnage in the region will continue to support tanker markets in the Americas, which have been pressured by record-high bunker fuel prices. Daily time charter equivalent earnings for MRs on the USGC-East Coast Mexico route stood about $24,000/d round trip at a rate of lump sum $450,000, a shipbroker said. On the 38,000 mt USGC-Brazil route, meanwhile, earnings were slightly lower around $10,000/d at a rate of w170. Time charter-equivalent earnings do not include daily operating expenses, which are typically around $7,000/d for an MR.

Multiyear gasoline highs

A trader who ships refined products to Mexico said the government is trying to ease high domestic gasoline prices by capping the IEPS special sales and services tax paid by importers. Platts assessments for gasoline delivered into Tuxpan reached $113.26/b on Feb. 14, the highest level since the assessment was created in February 2016. It started 2022 at $89.92/b and was assessed at $110.37/b on Feb. 17.

The IEPS would be added to the costs after delivery, but the government fluctuates it weekly, which creates a risk similar to currency fluctuations.

The trader did not know how long the ceiling on the tax would be in place, but said the government is aware of the "high" prices. "They're trying to help the end consumers at the pump," he said.