A container ship transits the Panama Canal in August 2023. Welcome Velasco (EFE)
The bottleneck of more than 100 ships carrying merchant cargo in the Panama Canal could fuel inflation, particularly in the US, and inflict huge losses on shipping companies crossing the strait. A severe drought in the Central American region, along with inefficient water processes many years ago, caused the water level in the canal to drop, leaving the Port Authority with no choice but to limit the number of ships transiting each day.
In total, the shipments that pass through this infrastructure in one year are worth around 248,521 million euros (around 270,000 million dollars). 73% of the trade in basic products and containers that cross the 33 kilometers of the Isthmus goes to the US, the Canal Authority Administrator recently reported. The agency that manages this infrastructure has had to limit the number of ships that can cross in a day to 32, when under normal circumstances up to 36 would cross. In this scenario, “more than 100 ships are waiting for the crossing,” the Panamanian company said in a statement on Tuesday.
However, the impact on Panama will be less, since the revenues from rights to cross the canal contribute only 6% of the country’s GDP. Shipping companies will suffer the greatest losses. “We have adapted our internal processes to the canal’s updated reservation requirements and ensured access to the necessary transit spaces to ensure a minimal impact on our customers,” said Danish Maersk, the world’s second largest shipping operator, in a statement. , which moves more than four million TEU (Twenty Foot Equivalent Unit) every year. In 2021, the company had sales of 57,082 million euros ($62,000 million).
“However, the low water level in the Panama Canal is a clear example of the impact of climate change on precipitation and weather patterns around the world, which is affecting the entire supply chain.” It is clear that we are now in a climate crisis, the severe ones regulatory framework for all shipping stakeholders,” the company added.
However, there are no estimates yet on how severe the economic damage could be, but for companies like Maersk this new crisis is a kind of déjà vu after the multi-billion dollar losses they suffered two years ago when a ship got stuck. in the Suez Canal in Egypt.
When economist Eduardo Zegarra read the news of the traffic jam, he believed his forecast had come true. In 2017, the agricultural and water issues specialist conducted a study for the Inter-American Development Bank (IDB) in which he estimated that water levels in port infrastructure would be so low that they would cause problems in world trade. “Most likely it will happen two or three times,” he added.
Climate change is leading to severe droughts in some parts of the world, while in other parts sea levels are engulfing coastal areas. This is undoubtedly the main cause of what is happening in the Panama Canal today, says Zegarra, a researcher at the Grade Center, but it’s not the only one. “In Panama City there is a serious problem of very inefficient water use for drinking water consumption. The contributions paid by the population are quite low. They don’t even cover the basic costs of production,” he assured.
In June 2016, a third lane for the passage of ships was inaugurated, increasing capacity. However, no investments have been made to also expand the water source for the canal, Ceguera says, and the basin that supplies water to the canal is the same one that supplies the population of Panama City, the expert explains. “If you look at the value that water for sewer use has compared to drinking water, there is a difference of almost five times. This could be the subject of an investigation by the authorities to find formulas for more efficient use of drinking water that would encourage slightly better availability for use in the canal,” says Zegarra.
other incidents
This Wednesday there were also two other incidents in the maritime infrastructure. The first of these was recorded in the Suez Canal, where a “light collision” between a tanker and an oil tanker caused traffic on this important sea route to be disrupted for several hours. At the end of this Tuesday, regular traffic had not yet recovered, but according to the road administration it will “resume in a few hours”.
The incident, the seventh so far this year, occurred yesterday morning when “a slight collision occurred between the LNG carrier BW Lesmes and the following oil tanker Burri” from the Cayman Islands, confirmed the President of the Suez Canal Authority, Lt. Gen. Osama Rabie , in a statement.
In western Turkey’s Çanakkale province, on the other hand, a fire that broke out from unknown causes forced authorities to halt part of maritime traffic through the Dardanelles Strait and preventively evacuate nine urban centers, according to Turkish broadcaster NTV.
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