Panama Canal Implements Drastic Reduction in Daily Sailings This Winter Amid Drought Crisis - Sobel Network Shipping Co., Inc.

Panama Canal Implements Drastic Reduction in Daily Sailings This Winter Amid Drought Crisis

Panama Canal officials are set to significantly reduce the number of available slots for ship transits during the upcoming winter season, responding to an unprecedented drought that has severely affected the man-made waterway’s water levels.

The decision follows the canal’s driest October on record, extending a prolonged period of elevated temperatures and scarce rainfall. Officials have already imposed restrictions on traffic in the canal, a critical route handling approximately 7% of global seaborne trade.

The canal administration announced a phased reduction in daily reservation slots: 25 slots this month, 22 in December, 20 in January, and 18 in February. This marks a considerable drop from the 32 daily transits recorded last month, and the usual capacity of the canal to handle an average of 40 transits per day.

Rainfall levels this year are approximately one-third lower than the previous year, leading to a significant decrease in the water level of Gatun Lake, the artificial reservoir supplying water to the canal’s locks and sustaining approximately half of Panama’s population, roughly two million people. The canal, operational since 1914, faces an unprecedented challenge.

Canal administrator Ricaurte Vásquez Morales highlighted the absence of wind thrusts and static air, contributing to the lack of rain—an unprecedented phenomenon for the canal.

At present, around 98 vessels are waiting to cross both sides of the canal, connecting the Pacific and Atlantic Oceans. While container ships with fixed schedules may not experience significant delays, tankers summoned on short notice for crude or gas transport can face weeks of entrapment.

To meet tight delivery schedules, some ships may resort to higher toll payments. Morales cited instances of propane carriers offering $2.4 million for a single transit, compared to the usual $500,000.

The canal administrator stressed the need for a second freshwater reservoir overlooking the canal, but a 2016 agreement restricting construction activities around the canal hampers immediate action. Little progress is expected until national elections in May 2024.

Shipping adviser Wilhelmsen highlighted the critical nature of booking slots, emphasizing potential indefinite delays for non-booked vessels. Additionally, recent protests over mining rules in Panama have led to road closures, with warnings that intensified blockades could impact the canal’s operations.

As the situation unfolds, potential delays, mis-deliveries of spare parts, and disruptions to crew movement loom if protests persist, according to Wilhelmsen. The canal, a vital global trade route, faces a complex set of challenges that require strategic and timely interventions to ensure continued operations.