A few months ago in this space, I wrote a column detailing how the Panama Canal has been affected by drought, and that vessel traffic through the shipping route has been adversely impacted by it.
If you missed that column and aren’t familiar with the ongoing situation, here’s a summary: according to climate scientists, Panama experienced its worst drought in over two decades last year, even though the country’s rainy season, which lasts from May through December.
Typically, the country experiences anywhere from 8.4 inches to 27.5 inches of rain during the last seven months of the year, but fell well short of that in 2023.
The 50-mile Panama Canal shipping lane—which is typically traversed by 14,000 ships each year – saw its water levels dip to a concerning level, leading to a traffic jam of container ships waiting to pass through the canal.
Now, here’s an update on the situation. As of mid-January, the drought has forced authorities to slash ship crossings through the Canal by 36%.
On Jan. 17 it was announced that canal authorities would cut daily ship crossings to 24, down from 38 a day in normal times last year. Panama Canal Administrator Ricaurte Vásquez said that in the first quarter of the fiscal year—October through December—the passageway saw 20% less cargo and 791 fewer ships than the same period the year before.
Vásquez estimates that dipping water levels could cost the Panama Canal Authority between $500 million and $700 million in 2024, compared to previous estimates of $200 million.
In January, the Associated Press reported that Canal authorities attributed the drought to the El Niño weather phenomenon, as well as climate change, and warned that it was urgent for Panama to seek new water sources for both the canal’s operations and human consumption, as the same lakes that fill the canal also provide water for more than 50% of the country, which has more than four million citizens.
Although the primary U.S. ports being affected by the traffic jam at the shipping route are on the East and Gulf coasts—New York/New Jersey and the Port of Savannah for instance— major West Coast ports also experienced a downturn in container traffic last year.
The Port of Los Angeles reported a nearly 13% drop in volumes in 2023, and Port of Long Beach data show a 12.2% dip last year compared to the year before. California’s third-busiest port, Oakland, said its volumes declined 11.6% in 2023.
While there are many components factoring into this, the ongoing jam through the Panama Canal doesn’t help matters.
Making the situation worse from a global perspective is a surge in attacks on container vessels in the Red Sea by Yemen’s Houthi rebels, resulting in ships being rerouted away from the corridor, which is a vital one for consumer goods and energy supplies.
“The combination is having far-reaching effects on global trade by delaying shipments and raising transport costs,” the Associated Press explained in a mid-January news report. “Some companies had planned to reroute to the Red Sea—a key route between Asia and Europe—to avoid delays at the Panama Canal, analysts say.”
The Panama Canal Authority has said that it continues its search for a long-term solution to the problem of future water availability and indicated that it could undertake initiatives to allow it to increase its storage capacity for water resources.
We will continue to monitor the situation and will have an update in the print and online editions of Pacific Maritime as needed.
Managing Editor Mark Nero can be reached at (619) 313-4351 or mark@maritimepublishing.com