Ongoing drought conditions in the vicinity of the Panama Canal could persist, creating challenges for global shipping traffic, warns the Panama Canal Authority (ACP).
Ricaurte Vásquez, the chief administrator of ACP, revealed that while there aren't any immediate restrictions for September, the canal might decrease daily transits from 32 to 30 or 31 in the upcoming fiscal year starting in October.
The situation becomes more alarming when considering a prolonged drought that exceeds a year. Such an extension might necessitate a revision of the canal's weather modeling, potentially leading to more rigorous restrictions. The anxiety surrounding the drought is accentuated since Panama's dry season is still a few months away, not beginning until late November.
However, Vásquez assured stakeholders, "We have no plans for a total suspension of canal operations."
The existing congestion at the canal was evident with a report of 122 ships awaiting transit, a slight reduction from the peak congestion of 163 ships earlier in August. Both northbound and southbound waiting times are nearing 6 days.
The current operational capacity has already seen a reduction, with a daily limit of 32 ships, down from the typical average of 34-36. The draft restriction stands at 44 feet, deviating from the usual 50 feet. This adjustment means vessels can't be loaded as deeply as before. The ACP’s strategy emphasizes maintaining this draft and managing the water levels effectively.
Vásquez highlighted an ongoing practice where container ships lighten their cargo load due to current restrictions. This is achieved by transferring 600-800 cargo boxes at a Panama Port terminal and moving them via rail.
Industry expert Charles Klein from the OEC Group noted, "Larger tankers are facing restrictions. Our clients must be meticulous in their loading processes, especially with heavier cargo."
Lake Gatun's depth showcases the gravity of the situation, currently standing at 79.6 feet, a substantial drop from the five-year September average of 85.5 feet.
Elucidating on the severity of the El Niño phenomenon, Vásquez pointed out the atypical simultaneous temperature rise in both the Pacific and Atlantic, suggesting that this challenging scenario may persist into the next year.
In a bid to enhance canal traffic flow, the ACP has reserved two slots of the Panamax locks, intended for smaller vessels, for the longest waiting ships. This temporary measure, in place until the end of September, aims to alleviate the backlog.
Despite these challenges, the disruptions, particularly for container ships, have been manageable, with pre-booking options ensuring limited disturbance to crucial supply chains, like apparel.
Klein, from OEC, expressed that their clientele experienced some hold-ups but emphasized, "The delays haven't been as severe as initially anticipated."
From an economic standpoint, the drought's implications could be profound for the Panama Canal, with Vásquez estimating potential revenue losses reaching $200 million in 2024.
Klein advises shippers to stay proactive, emphasizing the need for open communication and exploring alternative shipping routes when necessary.
