The congestion in the Panama Canal caused by the drought is affecting international trade

Around 130 ships, more than the Panama Canal normally handles, are waiting to cross the border, many of which are bulk carriers and gas tankers who could not make reservations. It is a congestion caused by the lack of water due to the severe drought this year, affecting international trade.

By the afternoon of this Tuesday, 128 ships were waiting in line to cross. 54 with reserve and 74 withoutthe Panama Canal said in a press release, assuring that “under normal circumstances, up to 90 ships await passage” through the route.

“For this month, the average wait time for unrestricted transits is between 9 and 11 days.”

That number is below Monday’s 134 waiting ships, the channel said in a written response, which also noted that “for this month, the average waiting time for unrestricted transits is between 9 and 11 days.”

The administration of Panama Canal (ACP) highlighted “the high demand” for its services “despite the challenges and actions” taken due to the drought, which “shows the confidence of (the) global shipping community” and underscores the “competitiveness and critical role” it plays . in world trade.

The congestion comes after the number of vessels that can navigate the canal each day was capped at 32 from a maximum of 38, a measure imposed since July 30 and “until further notice” as a result of “water shortages”. became. , as the head of the AKP, Ricaurte Vásquez, said.

This measure followed that gradual reduction in draft or depth that in the water reaches the submerged portion of a boat which is now at 44 feet out of a maximum of 50 feet.

This means that ships have to go along less burdenwhich affects revenue from tolls on the Panama Canal, a major world trade route that its administration says carries between 500 and 510 million tons of cargo each year.

In order to “manage” the current “congestion” and ensure ships on the route or line that have not received reservations can continue sailing continuously, it was decided to “extend reservation condition 3,” the channel added clarified that the situation has had no impact on the operational expansion since June 2016.

“Transits through the Neopanamax locks (expansion) remain at the normal average of 10 per day,” the ACP told EFE.

The impact

The main routes of the Panama Canal are the East Coast of the United States-Asia; US East Coast – South America West Coast and Europe – South America West Coast, which are affected in one way or another by the congestion.

runs through the canal all kinds of cargofrom container ships, the star segment of the business, to refrigerated fruit vessels, to bulk carriers, gas tankers and vehicle transporters, Jorge Quijano, who was the ACP’s administrator between 2012 and 2019, told EFE.

The ones crowding the entrance so much now Peaceful From the Atlantic, these are mostly bulk carriers transporting coal or iron ore and a few gas carriers, among others, that could not book transit. These are ships that do not follow fixed routes and have to transport cargo at short notice.

Some of these vessels, which industry sources say have to wait up to 14 days, are opting to go through auctions to secure a reservation, increasing their costs.

“You paid $700,000 for allowing me to participate in this auction“To this we must add the cost of tolls and other costs,” said the former administrator of the AKP.

Some oil transport ships choose other routes, such as Suez Canal or encircle the Cape of Good Hope, according to analyst reports.

Container ships escape the crisis

The vast majority of container ships, the canal’s main customer with revenues of at least $1.8 billion a year, appear to be emerging from the crisis, according to Quijano.

This section “also has a certain privilege of going through the canal because it can.” Better plan with reservations“, he added.

According to industry data, most container ships use fixed schedules and book their transits up to a year in advance.

“If the ship can reserve a specific day, the ship arranges and does arrive exactly the day before the scheduled date without having to waitsaid Quijano.

New water reservoirs

The low levels of the two artificial lakes that supply the city with water Canal, Gatun (1913) and Alhajuela (1935)are driving these operational decisions that will impact operations and expected fiscal 2024 revenues, which will decrease by approximately $200 million, according to the highway administration.

The canal regularly suffered from water supply problems. Adding to this year’s long drought is the arrival of El Niño, which could make matters worse early next year, the AKP has already warned.

Quijano recalled that the two artificial lakes also feed the canal supply more than 50% of Panama’s 4.2 million inhabitantsand that “there are proposals for the creation of another water reservoir elsewhere” which should be implemented “immediately”.

“We believe that in terms of water security, we have a better idea of ​​how to deal with what’s coming.”There are already studied options“But there are still steps to implement them,” Administrator Vásquez said in early August this year.

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