Christmas shipments to America could be delayed in the coming weeks, threatening the festival season as the Panama Canal suffers its worst drought ever.
Unprecedented conditions have caused water levels on the vital 50-mile shipping route connecting the Atlantic and Pacific to fall to their lowest level since the mid-20th century.
Dozens of giant container ships carrying gifts and festive items, including Apple’s new iPhones, televisions, exercise bikes, clothing and tree lights, are experiencing delays of up to four weeks – and the crisis could last for several more months.
Traffic jams in the canal could have far-reaching impacts on the global supply chain – with experts also warning that Christmas could be affected in the UK and Europe.
The cost of food and energy could also rise as grain and fuel are among the other essential goods currently transported through the canal and are experiencing delays.
Experts have warned that disruption to the canal is likely to continue for “some time”, with some fearing restrictions could last into 2025.
Low water levels at the Miraflores Locks of the Panama Canal on November 3rd this year
The Panama Canal locks are photographed last Saturday as drought conditions continue
Almost 80 ships attempting to transit the canal faced significant delays. Instead of the usual eight to ten hours that the transit takes, the ships now wait in line for one to two weeks.
Some companies have paid up to $4 million (£3 million) to get to the front of the queue and avoid waiting times, Fox News reported.
This compares to an average auction price of around $173,000 (£137,000) just a year ago.
Economist Inga Fechner of ING Research told Bloomberg: “It’s getting more expensive, and the search for alternative routes will increase costs and perhaps end up weighing on prices too.”
The average wait time in line rose from 4.3 days on Nov. 7 to 11.7 days this month, Panama Canal Authority data shows.
Before delays occurred on the important shipping route, about 38 ships passed through daily. In total, more than 14,000 ships crossed the canal in 2022.
However, with little water available to maintain the freshwater lock system, only 24 ships per day have been able to pass through since November 7, the Daily Mirror reported.
Ships have to take huge detours, some even lasting up to a month, through the Suez Canal in Egypt.
The number of ships passing through is expected to fall further to 18 per day from February onwards due to the drought.
Last month, Everstream Analytics chief meteorologist Jon Davis told FOX Weather, “It’s the worst situation since the middle of the last century.”
He warned that the Panama Canal plays a crucial role in global trade, allowing the transport of a significant amount of goods, and that the impact will be felt across all sectors.
“Many agricultural products are shipped both to and from the United States,” Davis added. “The canal is an important corridor for container ships, so products coming into the U.S. from China, for example, are experiencing delays… that impacts Santa’s delivery schedule.”
There were warning signs back in August when more than 200 ships became stuck on both sides of the Panama Canal after authorities limited the number of crossings due to a severe drought.
The large ships, believed to be carrying goods worth millions of dollars, were stuck in traffic and sometimes waited weeks for passage.
Ship tracking data highlighted the scale of the problem: Hundreds of ships, mostly bulk cargo or gas carriers, waited near canal entrances in the Pacific and Atlantic.
To save water, the water authorities limited the number of daily passages through the canal to 32.
Almost 80 ships attempting to transit the canal faced significant delays. Instead of the usual eight to ten hours that the transit takes, the ships now wait in line for one to two weeks.
Unprecedented conditions have caused water levels on the vital 50-mile shipping route connecting the Atlantic and Pacific to fall to their lowest level since the mid-20th century.
Dozens of giant container ships carrying gifts and festive items, including Apple’s new iPhones, televisions, exercise bikes, clothing and tree lights, are experiencing delays of up to four weeks – and the crisis could last for several more months.
On Monday you can see ships queuing in front of the Panama Canal. According to official data, the average waiting time in the queue rose from 4.3 days on November 7 to 11.7 days this month
Low water levels at the Miraflores Locks of the Panama Canal on November 3rd this year
The Panama Canal route. As the region enters the dry season in January, water levels in Gatun are expected to reach their lowest ever recorded
The Miraflores Locks of the Panama Canal are pictured on November 3rd of this year
Traffic jams in the canal could have far-reaching effects on the global supply chain – with experts warning that Christmas could be affected in the UK and Europe.
The cost of food and energy could also rise as grain and fuel are among the other essential goods currently transported through the canal and are experiencing delays.
Experts have warned that disruption to the canal is likely to continue for “some time”, with some fearing restrictions could last into 2025.
According to Fox News, some companies have paid up to $4 million to get to the front of the queue and avoid wait times.
This compares to an average auction price of about $173,000 just a year ago.
Economist Inga Fechner of ING Research told Bloomberg: “It’s getting more expensive, and the search for alternative routes will increase costs and perhaps end up weighing on prices too.”
The average wait time in line rose from 4.3 days on Nov. 7 to 11.7 days this month, Panama Canal Authority data shows.
Before delays occurred on the important shipping route, about 38 ships passed through daily. In total, more than 14,000 ships crossed the canal in 2022.
But with limited water available to maintain the freshwater lock system, only 24 ships have been able to pass through each day since November 7, the Daily Mirror reported.
Ships have to take huge detours, some even lasting up to a month, through the Suez Canal in Egypt.
Last Saturday, a container ship was spotted near the Panama Canal amid concerns about shipping
Low water levels at the Miraflores Locks of the Panama Canal on November 3rd this year
On August 11th this year, a container ship sails along the Panama Canal
The number of ships passing through is expected to fall further to 18 per day from February onwards due to the drought.
James Allen, vice president of liquefied natural gas chartering and operations at Cheniere Energy, said: “I sleep better at night knowing I can get around the Cape or Suez and not have to wait in line, especially when things get really desperate will begin paying $4 million.’
An unprecedented drought this year has caused water levels on the canal to reach their lowest level at this time of year in almost a century.
Panama’s dry season has started early this year and forecasts suggest there won’t be much rain in the coming weeks.
Water levels at Gatun Lake, the main tributary to the canal, have improved slightly over the past month compared to autumn levels, but meteorologists warn that this is not significant enough.
As the region enters the dry season in January, water levels in Gatun are expected to reach their lowest ever recorded.
Everstream Analytics chief meteorologist Jon Davis said this was “a cause for concern,” adding that the chances of improvement in the first quarter of 2024 were “slim at best.”
The container ship Tampa Triumph passes through the Miraflores locks in September this year
Aerial view of the Panama Canal in the Pedro Miguel Locks area on December 13 last year
On April 19 of this year, a bulk carrier travels along the Panama Canal through the Cocoli Locks
He expects any improvement in lake levels or easing of restrictions will not begin until May or June next year, when Panama’s rainy season begins.
The annual dry season in Panama typically begins in December and lasts until April or May.
The drought, which has already seen temperatures rise by 1.2°C (34°F), will be discussed at the Cop28 environmental conference, with delegates hoping to focus on limiting global warming to 1.5°C (35°F). ) to agree.
Steven Paton, director of the Physical Monitoring Program at the Smithsonian Tropical Research Institute in Panama, said: “This is now our third extreme water deficit in the last 25 years. “That’s a huge warning sign.”
Companies operating the canal include British American Shipping, which carries up to 40,000 containers per year.
Its chief executive, Paul Snell, told Bloomberg: “We face lower capacity, more trips, higher costs and a less efficient supply chain.”
“Everyone has to get creative and decide what they want to do.”
There were warning signs back in August when more than 200 ships became stuck on both sides of the Panama Canal after authorities limited the number of crossings due to a severe drought. A cargo ship sails through the Agua Clara Locks of the Panama Canal in Agua Clara, Panama, on August 3, 2023
He added that the problems have resulted in the company no longer being able to deliver freshly cut ferns from Seattle to flower markets in Rotterdam.
And now nuts and dried fruits had to be transported from California across the USA by rail to Texas or Virginia and then reloaded onto container ships to Europe.
But for fresh fruit from countries like Chile and Peru that are transported to Europe via the canal, the longer transport times become a problem.
Ignacio Caballero, marketing director for Frutas de Chile, a trade group that represents Chilean fruit growers, told Bloomberg that cherries, grapes, plums, nectarines and blueberries could all struggle to get to market.
In August, more than 200 ships were stranded on both sides of the canal after authorities limited the number of crossings due to drought.
The large ships, which were probably transporting goods worth millions of dollars, were stuck and sometimes waited weeks for the crossing.
The impact has led the broadcaster to estimate a loss in revenue of up to $200 million by 2024.