Drought in Panama Canal delays ships for weeks

(CMR) Drought affecting the Panama Canal has created major problems for shipping companies worldwide as the Panama Canal Authority has reduced maximum ship weights and daily ship crossings to conserve water.

Recently, the Panama Canal, a vital waterway connecting the Atlantic and Pacific oceans, has been grappling with significant challenges due to unprecedented low water levels caused by a prolonged drought. The ramifications of this situation are becoming increasingly evident as shipping companies and shippers have to adapt to the reduced operational capacity of the canal.

According to Reuters, maritime transportation experts fear such events could become the new normal as rainfall deficits in the world’s fifth-wettest country spotlight climate risks affecting the ocean shipping industry that moves 80% of global trade.

Ship owners can carry less cargo, shift to alternate routes that can add thousands of miles to the trip, or grapple with queues that earlier this month backed up 160 vessels and delayed some ships by as much as 21 days.

Evergreen, a prominent shipping company, faced a unique predicament when its newly added vessel, the Ever Max, with a capacity of 17,312 twenty-foot equivalent units (TEUs), had to unload a staggering 1,400 containers before being able to traverse the Panama Canal.

This step was necessitated by the draught restrictions imposed by the Panama Canal Authority (ACP) in response to persistently low water levels resulting from the ongoing drought. The containers had to be transported via rail across the isthmus and reloaded at the Atlantic end of the waterway. These restrictions affected the canal’s neo-Panamax locks, designed to accommodate larger vessels, causing disruptions in shipping schedules.

The Panama Canal Authority took measures to mitigate the impact of the drought on the waterway’s freshwater supply and infrastructure. A draught restriction was initially set at 44.5 feet in late May, subsequently reduced to 44 feet a week later. While a planned further reduction to 43.5 feet was postponed, the number of daily transits through the canal was curtailed to 32, with ten allowed at the neo-Panamax locks and 22 at the Panamax locks.

Shippers have begun reconsidering their routing strategies in response to the ongoing constraints. Shifting shipments back to the US west coast from the east coast has become a notable trend as the operational limitations of the Panama Canal persist.

Despite these proactive steps, the undeniable reality is that the Panama Canal’s prolonged reduced operational capacity has created substantial disruptions and uncertainties in global shipping routes. As waiting times for merchant ships increase, and backlogs accumulate, shippers are advised to carefully assess their options and consider alternative routes, potentially routing backhaul container services through the Suez Canal or around Africa.

A naturally occurring El Nino climate pattern associated with warmer-than-usual water in the central and eastern tropical Pacific Ocean contributes to Panama’s drought.

The area around the canal is experiencing one of the two driest years in the country’s 143 years of keeping records, according to data from the canal authority and the Smithsonian Tropical Research Institute (STRI).