A severe drought has limited the water depth and weight of ships passing through the Panama Canal and caused shipping companies to impose additional container surcharges on shippers for months.
“Based on the current and forecast water levels in Lake Gatun, the Panama Canal Authority (ACP) has had to reduce the number and weight of vessels that can transit through the canal. As we continue to work closely with the ACP, moderate and… “In order to adapt our operations to the changes, we have made changes to the services to ensure that the impact on our customers is as minimal as possible,” it says Maersk customer service.
Maersk stressed that there will be no delays at northbound cargo stops in Philadelphia and Charleston. Companies like McDonald's import their Wagyu beef from Australia and import their beef to the East Coast via this route.
For southbound ships, Maersk warned customers that there could be delays.
The company is also eliminating the shipping route to Cartagena, Colombia.
The Panama Canal Authority increased the number of transit slots to 24 daily this month after first announcing a reduction in ship transits to 18 in February. However, this is well below the daily transits of 36.
The Panama Canal is popular for East Coast trade because it is faster than other options. The transportation time for sea freight from Shenzhen, China to Miami, Florida via the Suez Canal is 41 days. The journey through the Panama Canal only takes 35 days. The latest problems with the canal's water levels come as additional shipping traffic is expected as shipping companies avoid the Red Sea because of the ongoing threat of a Houthi attack. Maersk is one of the shipping companies that recently had to suspend traffic in the Red Sea.
Forty percent of all U.S. container traffic passes through the Panama Canal each year, which collectively transports approximately $270 billion worth of cargo annually.
The dry season in Panama is traditionally from the end of December to April.
According to the PCA, it takes about 50 million gallons of fresh water to move a ship through one of the locks. The Panamax locks lose more water compared to the Neo-Panamax lock. The Neo-Panamax locks feature a water recovery system that can recover 60% of the water used during a ship's passage through the locks. The Panamax locks do not have the water recovery capability of the Neo-Panamax locks.
Maersk stressed that overall it is not about bypassing the Panama Canal, but its decision regarding cargo to Oceania will have an impact on the declining cargo volume through the Panama Canal. In 2023, 510 million tons of cargo were transported through the canal, eight million tons less than in 2022. Despite the decline in volume, the canal authority reported record revenue from October 2022 to September 20, 2023. Surcharges and other fees The additional costs of crossing the Channel led to an increase in sales. From October 1, 2022 to September 30, 2023, the PCA received $3.3 billion. That was $319 million more than a year earlier.
The Panama Canal Authority said its multimodal transportation system is a way for maritime customers such as Maersk and the PCA itself to address the impacts of global climate variability and current water shortages at the canal. “We will continue to support Maersk’s operations. … We are focused on providing our customers with both short- and long-term solutions in the event that climate anomalies impact our operations,” it said in a statement to CNBC.