PANAMA CANAL CLIMACTIC EMERGENCY
Approximately 14,000 ships, accounting for 6% of global maritime trade, pass through the Panama Canal annually. This year, the numbers are expected to drop due to the unseasonably long drought impacting Panama. Watershed levels for the region are the lowest they have been since 1950. Weather forecasts suggest the El Niño weather phenomenon will blanket the region in warm, dry air through early 2024 extending the drought conditions much longer than anticipated. Lower than average rainfall has created a critical need for freshwater to supply the canal watershed, forcing authorities to implement and extend several water saving measures to maintain enough resources for human consumption and reduce impact to vessel transit.
IMPACTS TO THE SUPPLY CHAIN
The Panama Canal Authority announced a temporary reduction in the number of available bookings for the Panamax Locks along with modifications to the Neopanamax Locks auctions slots. Known as Booking Condition 3, the condition reduces the daily available slots for supers and regulars to 10 and 4 respectively. The draft restrictions implemented in June have been extended indefinitely. These measures are an effort to save water and mitigate the negative effects of the dry season in the Canal watershed.
The restrictions are creating vessel congestion and freight delays. As of August 17, 2023, the Canal Authority reports a backlog of 130 maritime cargo vessels waiting to pass through both the west and east bound channels. In response, several ocean carriers have implemented a Panama Canal Charge (PCC) ranging from $300 – $500 per container.
“We have implemented procedures such as cross-fillings, cross-spilling and short chamber lockages in the Panama locks, and increased the use of water-saving basins in the Neopanamax locks. Additionally, we have minimized direction changes between northbound and southbound transits in Gatun locks, maximized tandem lockages and have suspended hydroelectric power generation among other controls.”
Ricaurte Vásquez Morales
Panama Canal Administrator
PANAMA CANAL AUTHORITY MITIGATION EFFORTS
The Canal Authority is working to streamline operations to increase efficiencies, reduce the amount of freshwater used to operate the Canal, and to ensure the important resource remains available to marine vessels. A partnership between Panama Canal specialists and the United States Corps of Engineers are reviewing alternative solutions to enable the Panama Canal to maintain operations for at least the next 50 years.
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