By: Staff Writer
August 25, 2023
The Panama Canal Drought has trapped over 200 ships in its muddy slush, some unable to move for over three weeks.
Climate change is hitting the Central American entryway hard as the once flowing canal has seized up under the rising temperatures that have sucked the water literally out of the canal.
As the Wall Street Journal reports, the famous human-dug canal has more than 200 ships waiting to pass through it as its transit continues to be stymied thanks to the worst drought it’s experienced in a century.
The 50-mile-long canal, as the report notes, relies on rainwater to replenish it. When it doesn’t rain enough, the authorities that control the canal have to reduce traffic through it to conserve water, and those that are allowed through have to pay higher fees to do so.
Daily traffic is currently capped at 32 ships, which is down from the prior average of about 36 when there’s enough water for the canal — which uses more than 50 million gallons of water per day — to operate at full capacity.
Canal administrator Ricaurte Vásquez Morales said during a press event that traffic restrictions may remain in place until the end of the year and added that it will cost the canal an estimated $200 million in lost revenue.
Beyond the regulatory and financial concerns associated with this massive backup, Vásquez Morales suggested that the drought also illustrates one of the biggest existential threats facing the canal as well.
“We have to find other solutions to remain a relevant route for international trade,” he said during the July press summit. “If we don’t adapt, we are going to die.”
The canal typically processes 40 percent of all US container traffic, Alix Partners reported. The traffic jam is causing a slowdown in consumer goods delivery and is already stoking concerns over the holiday supply chain. Some shippers might experience a supply-chain bottleneck and delays in deliveries due to the conditions, according to Alix Partners.
Authorities have implemented further restrictions, including lowering the number of booking slots for large ships to 14 from 23 and lowering the number of ships allowed to pass through the canal from a range of 36-to-34 to 32.
But the stuck ships should come as no surprise; it’s the third year in a row in which the world has marvelled at an unfortunate logjam of maritime traffic.
As of Tuesday, 125 booked and non-booked vessels were waiting to pass, down from more than 160 ships two weeks ago, according to official numbers. Another 40 vessels were approaching the waterway, versus 50 two weeks ago, according to Refinitiv Eikon data.
“In line with our commitment to providing a reliable and sustainable service, we have chosen to extend booking Condition 3. This allows us to manage congestion and ensures ships en route or in queue, which haven not secured reservations, can still transit in competitive time frames,” the canal’s authority told Reuters this week.
However, the average wait time for vessels to pass has risen to between 10 and 11 days this month, from 6-7 days last month. The waiting surpasses 17 days for cargo vessels and liquefied petroleum gas carriers, and is almost 13 days for tankers.