A container ship transits the Agua Clara locks in the Panama Canal on March 24, 2023 (AP Photo/Arnulfo Franco, LaPresse)
The lack of rainfall has lowered the water level in the two artificial lakes that feed the Atlantic-Pacific Channel
From May 24, it will be more difficult for shipping companies to move goods through the Panama Canal, which connects the Atlantic with the Pacific. Due to the drought ravaging Panama, there has been less water in the canal in recent months and from Wednesday the largest container ships that transit it will have to reduce their draft, which is the height of the part of the hull that is underwater. transport fewer goods or otherwise limit their weight. Some companies have already announced new freight rates.
This is the sixth time since the beginning of the year that the Panama Canal Authority has imposed a draft reduction. Between February and April, it rained much less than normal and the water levels of Alhajuela and Gatún, the two artificial lakes that supply water to the canal, dropped significantly as the main source that feeds them is rainwater. In mid-April, the draft of the Neopanamax, the largest ships that can pass, was reduced from the normal 15.2 meters to 14.5 meters; The limit will be 13.6 meters from Wednesday and 13.4 meters from May 30.
It has already happened that the permissible draft has been reduced due to a drought: it was lowered to 13.1 meters in both 2019 and 2016. As an article in Bloomberg explains, the canal’s problems are also linked to some design flaws made in the structure’s expansion, which was carried out to allow the passage of larger ships and was completed in 2016.
Satellite images of the Panama Canal and Lake Alhajuela from April 14, 2023 (European Union, Copernicus Sentinel-2)
According to forecasts, the water levels of the lakes will also drop in the coming months: Nathan Strang, managing director of the transport company Flexport Inc., claims that the volume of goods could be reduced by 40 percent. More ships will be needed to transport the same quantities of products, costs will increase and waiting times for crossing the canal are expected to increase. It is also possible that some companies will stop using it altogether, choosing alternative transport solutions or abandoning certain routes altogether.
Draft reduction is not a problem for ships carrying liquefied natural gas (LNG) as they have a shallower draft. However, they could also suffer from any shortages, which could cause problems for US gas exports, which are currently expanding due to the aftermath of the war in Ukraine.
In Panama, too, the drought is a problem for many economic activities. Some fear that the need for the canal, which is a key economic resource for the country, will create conflict with other sectors that need water. This is all the more true as the expected return of El Niño, the climatic phenomenon that regularly occurs in the South Pacific and affects the meteorological conditions of the countries bordering the ocean, is expected to result in less precipitation in Central America in the second half of the year.
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