According to CNN, much of Central America, including Panama, has suffered the "worst early disaster in 70 years" in recent months, causing the canal's water level to drop 5% below the five-year average , and the El Niño phenomenon may lead to further deterioration of the drought.
Affected by severe drought and El Niño, the water level of the Panama Canal continues to drop. In order to prevent the freighter from running aground, the Panama Canal authorities have tightened the draft restrictions on the freighter. It is estimated that trade between the East Coast of the United States and Asia, and the West Coast of the United States and Europe will be greatly dragged down, which may further increase prices.
Additional fees and strict weight limits
The Panama Canal Authority recently stated that the drought has affected the normal operation of this important global shipping channel, so additional fees will be imposed on passing ships and strict weight restrictions will be imposed.
The Panama Canal Company announced another tightening of cargo capacity in order to avoid freighters being stranded in the canal. Restricting the maximum draft of "Neo-Panamax" freighters, the largest freighters allowed to pass through the canal, will be further restricted to 13.41 meters, which is more than 1.8 meters lower than normal, which is equivalent to requiring such ships to only carry about 60% of their capacity through the canal.
However, it is expected that the drought in Panama may worsen. Because of the El Niño phenomenon this year, the temperature in the east coast of the Pacific Ocean will be higher than that in normal years. It is expected that the water level of the Panama Canal will drop to a record low by the end of next month.
CNN said that the canal needs to transfer water from the surrounding freshwater reservoirs in the process of adjusting the water level of the river through the sluice switch, but the water level of the surrounding reservoirs is currently declining. The water in the reservoir not only supports the regulation of the water level of the Panama Canal but also is responsible for providing domestic water for the residents of Panama.
Freight rates start to increase
Data show that the water level of Gatun Lake, an artificial lake near the Panama Canal, dropped to 24.38 meters on the 6th of this month, setting a record low.
As of the 7th of this month, there were 35 ships passing through the Panama Canal every day, but as the drought intensifies, the authorities may reduce the number of ships passing per day to 28 to 32. Relevant international transportation experts analyzed that the weight limit measures will also lead to a 40% reduction in the capacity of ships passing by.
At present, many shipping companies relying on the Panama Canal route have increased the transportation price of a single container by 300 to 500 US dollars.
The Panama Canal connects the Pacific Ocean and the Atlantic Ocean, with a total length of more than 80 kilometers. It is a lock-type canal and is 26 meters higher than sea level. Ships need to use the sluices to raise or lower the water level when passing, and each time 2 liters of fresh water need to be discharged into the ocean. One of the important sources of this fresh water is Gatun Lake, and this artificial lake mainly relies on precipitation to supplement its water source. Currently, the water level is constantly decreasing due to the drought, and the meteorological department predicts that the lake's water level will set a new record low by July.
As trade in Latin America grows and cargo volumes increase, the importance of the Panama Canal is undeniable. However, the reduction in shipping capacity and the increase in freight rates caused by the drought are also not a small challenge for importers.
Senghor Logistics helps Panamanian customers transport from China to Colon free zone/Balboa/Manzanillo, PA/Panama city and other places, hoping to provide the most complete service. Our company cooperates with shipping companies such as CMA, COSCO, ONE, etc. We have stable shipping space and competitive prices. Under majeure such as drought, we will make industry situation forecast for customers. We provide valuable reference information for your logistics, helping you make a more accurate budget and prepare for subsequent shipments.
Post time: Jun-16-2023
