Panama's Drought Continues; By February, Canal Capacity Will Drop From 36 Ships/Day To 18 [View all]

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Panama is one of the wettest countries in the world and the canal and its surrounding lakes have been blessed with an abundance of water. However, in 2023 a rainfall deficit, exacerbated by the El Niño weather phenomenon, led to the water levels in Lake Gatun dropping. The twin demands of the canal and the local population have left the lake facing a water deficit of 3bn litres a day.

Lake Gatun’s water level is now close to the lowest point ever recorded during a rainy season, forcing the Panama Canal authority who manages the waterway to restrict the number of vessels passing through. In normal times, the Panama Canal has capacity to handle 36 ships a day. But as water has grown scarcer, the canal authority has reduced that number to 22. By February, it will be just 18. The impact on shipping has never been “so severe”, says Nitin Chopra, a former tanker captain who is now senior marine risk consultant at Allianz Commercial Asia.

Those who rely on the route are left with no good options; they can wait up to weeks at a time to be allowed through the canal, pay up to $4m to jump ahead in the queue – or do what many shipping companies have been forced to and avoid the route entirely, adding days or weeks to their journey. Every one of these choices comes at a serious financial cost to traders and some operators have warned that due to the delay, some goods that are transported from China may not be available to Christmas shoppers on the US east coast.

With attacks on the world’s busiest trade route in the Red Sea leading many companies to avoid the Suez Canal altogether, restrictions at the Panama Canal will only pile more pressure on global supply chains – just as governments around the world attempt to tame inflation. “In the long run we’re looking at a big increase in the cost of commodities – it will be passed on to the consumer,” says Chopra.

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https://www.theguardian.com/environment/2023/dec/22/changing-climate-casts-a-shadow-over-the-future-of-the-panama-canal-and-global-trade