If the drought continues, the Panama Canal will further reduce daily traffic

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If the drought continues, the Panama Canal will further reduce daily traffic

The Monrovia NSU CHALLENGER bulk carrier transits the expanded canal through the Cocoli Locks in the Panama Canal on the outskirts of Panama City on April 19, 2023. REUTERS/Aris Martinez Get license rights

PANAMA CITY, Sept 12 (Reuters) – The Panama Canal could further reduce its maximum daily shipping traffic if this year’s drought continues, the waterway’s administrator said on Tuesday.

An estimated 5% of world trade is waiting for the backlog of ships passing through the transatlantic canal. This year began restricting vessel draft and daily clearances to conserve water.

Many ships have had to lighten cargo before passage, and freight costs have increased ahead of the Christmas shopping season.

From the normal 36 vessels to the current 32 vessels authorized to operate each day. Maximum vessel draft is limited from 50 feet to 44 feet.

To reduce congestion, the canal recently changed its booking system to allow more unbooked ships to pass through and give priority to long-waiting ships.

As of Tuesday, 116 ships were waiting to pass through Panama, up from 160 in early August. According to official data, the maximum waiting time is 14 days, up from 21 days a month ago.

The president of the Panama Canal Authority, Ricardo Vasquez, said the waterway would choose to reduce daily traffic if necessary before planning further reductions to the authorized vessel draft, which would affect shippers the most.

Route restrictions are not scheduled for this month. But he said in its budget for the fiscal year starting in October, the canal could be reduced to 30-31 daily traffic.

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The El NiƱo weather phenomenon “is very severe this year. We have warm temperatures in the Pacific and Atlantic at the same time,” Vasquez told reporters. “In the coming months, in the absence of significant rainfall, we expect to be ready.”

Prolonged drought

The water level of Khatun Lake, which feeds the waterway, was 24.2 meters (79.7 feet) last week, compared to 26.6 meters in September in recent years.

If the drought lasts more than 12 months, the canal may be forced to change its weather model, prompting additional restrictions, Vasquez added.

I do not believe that the canal works will be stopped,” he said.

Panama will eventually have to reroute water to Lake Kaduna to secure enough water for the canal, which uses 50 million gallons (190 million liters) of fresh water for each ship.

“We are working diligently with the authorities to make an arrangement that will lead to the construction of additional reservoirs,” Vasquez said. The proposed plan, which would require a change in legislation and must be submitted to Congress, could be open for bids next year.

With next year shaping up to be an even drier season, experts have warned seaborne trade could be disrupted. An early start to Panama’s dry season and warmer-than-average temperatures will increase evaporation and lead to lower water levels by April, they say.

Reporting by Mariana Baraka, Editing by Gary McWilliams, Timothy Gardner and David Gregorio

Our Standards: Thomson Reuters Trust Principles.

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Focuses on energy-related sanctions, corruption and money laundering with 20 years of experience covering Latin America’s oil and gas industries. Born in Venezuela and based in Houston, she wrote “Oro Rojo,” a book about Venezuela’s troubled state company PDVSA and a mother to three boys.

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