According to the BBC, the Panama Canal is set to impose additional reductions in the number of ships permitted to traverse the vital waterway, citing the most severe drought in over seven decades. The Panama Canal Authority (ACP) has been compelled to make this decision as a result of the driest October on record since monitoring began in 1950.
The ACP has attributed the drought to the El Niño weather phenomenon, which has contributed to the critical water shortage. This situation is anticipated to result in heightened shipping costs for the global trade industry.
The Panama Canal plays a pivotal role in reducing the time and distance required for ships to transit between the Atlantic and Pacific oceans. It operates around the clock, 365 days a year, accommodating an annual traffic of approximately 13,000 to 14,000 vessels, as reported by the canal authority.
The naturally occurring El Niño climate pattern, characterized by warmer-than-usual waters in the central and eastern tropical Pacific Ocean, is exacerbating Panama’s water crisis. Gatun Lake, a vital reservoir primarily supplied by rainfall and utilized for the canal’s lock system, has seen water levels plummet to unprecedented depths for this time of the year, according to the ACP.
Beginning on November 3, the ACP will reduce the number of booking slots from 31 per day to 25 per day. This figure is expected to further diminish over the next three months, reaching 18 slots per day starting in February 2024.
In recent months, the ACP has already introduced various passage restrictions aimed at conserving the scarce water resources. Earlier this year, authorities implemented unprecedented reductions in the number of ships permitted to transit the canal, resulting in substantial delays and congestion. These delays have had a ripple effect, driving up shipping rates in other regions and decreasing the global availability of vessels, according to an analysis by the US Energy Information Administration.
The impact of these restrictions has been particularly pronounced for gas transporters, leading to record-high delays in Panama and an associated increase in the cost of shipping liquefied gas from the United States.
Sources: AMP, BBC
