Traffic Jam in the Panama Canal Due to Drought Impacts International Trade

    The canal has suffered cyclically from water supply problems

    Must Read

    Creating a Conscious alternative news network that we feel the world needs. Pura Vida!

    Around 130 ships, more than double the number normally handled by the Panama Canal, wait to cross the waterway, many of them bulk carriers and gas carriers that could not make a reservation, a congestion derived from the lack of water due to the severe drought in this year, which impacts international trade.

    As of last Monday afternoon, there were 134 ships in line to cross the Panama Canal, the administration said, which specified that “for this month, the average waiting time for unreserved transits is between 9 and 11 days. Normally, there are around 60 ships in line”, Jorge Quijano, who was the administrator of the Panama Canal Authority (ACP) between 2012 and 2019, said.

    This traffic jam occurs after the number of ships that can transit through the canal each day was limited to 32, out of a maximum of 38, a measure imposed since July 30th and until “further notice” therefore “of not having water”, as the head of the ACP, Ricaurte Vásquez, said. This move followed a stepwise reduction in draft, or the depth in the water that the submerged part of a vessel reaches, which is now 44 feet from a maximum of 50.

    This implies that ships must pass with less cargo, which impacts the income from tolls of the Panama Canal, a relevant route of world trade, which moves between 500 and 510 million tons of cargo each year, according to data from the administration. The situation does not affect the operational expansion since June 2016. “Transits through the Neopanamax locks (expansion) maintain their normal average of 10 per day”, the ACP told EFE.

    The impact

    The main routes served by the Panama Canal are the East Coast of the United States-Asia; East Coast of the United States-West Coast of South America, and Europe-West Coast of South America, which are being impacted in one way or another by the traffic jam. All types of cargo pass through the Canal, from container ships, the star segment of the business, to refrigerated ships with fruit, passing through bulk carriers, gas carriers and vehicle carriers, Quijano stressed.

    Those that are now crowded both at the entrance of the Pacific and the Atlantic are mostly bulk carriers that transport coal or iron ore, and some gas carriers, among others, that could not book transit. These are ships that do not follow fixed routes and must transport cargo at short notice.

    Some of these vessels, which can accumulate up to 14 days of waiting according to industry sources, are opting for auctions in order to get a reservation, which raises their costs. “They have been paying up to US$700,000 to be able to get that auction, to that we must add the cost of the toll and others”, said the former administrator of the ACP. Some oil-carrying ships are turning to other routes, such as the Suez Canal or around the Cape of Good Hope, according to analyst reports.

    Container ships dodge the crisis

    Most container ships, the canal’s main client, with revenues of at least US$1.8 billion a year, Quijano said, appear to be evading the crisis. This segment “also has some privilege to go through the channel because it can be better scheduled with reservations”, he added.

    Most container ships use fixed schedules and book their transits up to a year in advance, according to industry data. “If the ship can reserve for a particular day, it accommodates itself to arrive exactly the day before it is going to happen and it does so without having to wait”, Quijano said.

    New water reservoirs

    The low levels of the 2 artificial lakes that supply water to the canal, Gatún (1913) and Alajuela (1935), are the cause of these decisions that are impacting the operation and the income expected in fiscal year 2024, which will fall in about US$200 million, as already reported by the highway administrator.

    The canal has suffered cyclically from water supply problems. Added to this year’s long drought is the arrival of El Niño, which could worsen the situation at the beginning of next year, as the ACP has already warned.

    Resonance Costa Rica
    At Resonance, we aspire to live in harmony with the natural world as a reflection of our gratitude for life. Visit and subscribe at Resonance Costa Rica Youtube Channel
    - Advertisement -
    - Advertisement -
    - Advertisement -

    Subscribe to our newsletter

    Get all the latest news, events, offers and special announcements.

    Latest News

    OECD Will Hold Its First Environmental Sustainability Summit in Costa Rica

    On October 5, Costa Rica will host the Ministerial Summit of the Organization for Economic Cooperation and Development (OECD) on Environmental Sustainability.
    - Advertisement -

    More Articles Like This

    - Advertisement -
    Language »