Panama Canal Says Traffic Woes Will Last Into Next Year
(Bloomberg) -- The operator of the Panama Canal said there’s no immediate prospect of relief from the drought that’s reduced water levels and snarled shipping and global supply chains.
Panama Canal Administrator Ricaurte Vásquez Morales said Tuesday that abnormally high ocean temperatures, an unpredictable rainy season and the persistence of the El Niño weather phenomenon mean officials will have to continue restricting vessel traffic into 2024.
It means the long waits bedeviling the canal are likely to continue through the months leading up to both Christmas and Chinese New Year, when it’s normally busiest.
The number of ships moving each day through the canal has slipped to 32 from 36 because of declining reservoir levels. The backlog of ships waiting to enter the canal has spurred fierce bidding for open slots.
“This is not the most severe drought Panama has faced, but given the operation of the canal, this is the most severe drought that we are facing even with the level of operations we currently have,” Vásquez Morales said during the virtual press briefing.
The canal will need to maintain draft levels — the distance between the canal floor and the bottom of a ship’s hull— at 44 feet (13 meters). That’s enough for about 70% of the canal’s traffic. Officials may need to reduce the number of ships moving through the system to maintain those levels, Vásquez Morales said.
The canal’s board of directors is reviewing a plan to create an additional reservoir to support future water demand for the waterway and Panama itself. It will require congressional approval, Vásquez Morales said.
Alexei Oduber, managing director at GAC Panama, which provides services for canal users, said in an interview that the number of times a slot is auctioned off varies. But slots are often awarded at the minimum bid, which can be as low as $110,000, he said.
Ports including Mexico’s Lazaro Cardenas and Buenaventura in Colombia have expanded activity for containers seeking alternatives, Oduber said.
“There are several options and many ways to get through,” he said.
(Updates seventh and eigth graph with Panama Canal comments and additional details.)
©2023 Bloomberg L.P.
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