The prolonged drought has endangered the Panama Canal, one of the vital shipping routes for global cargo ship traffic.
Cargo ships are piled up and suffer long waits, of up to nearly a month, to obtain passage authorization. The low flow due to the months without rain and the measures applied to conserve water lead to this traffic jam, which has increased to over 200 stranded ships, unable to take the cargo to its destination.
The restrictions have already caused spot shipping prices between China and the United States to rise as much as 36% amid very high sea temperatures that, climatologists note, can boost extreme weather.
The authorities that regulate the Panama Canal have reduced the maximum weight of ships and the daily crossing to thirty-two, with the aim of fluvial preservation. Experts fear that this is "the new normal" due to the rainfall deficit in the fifth rainiest country in the world and underline the climate risks affecting the maritime transport industry, which moves 80% of world trade.
Ship owners have the option to carry less cargo, to choose alternative routes that involve thousands of kilometers on the journey, or to struggle with these long queues and weeks of waiting. Those most affected by the traffic jam are bulk cargo ships or gas carriers.
According to sources at the commercial firm Dorian LPG, which manages about twenty vessels carrying gas, the delays are changing every day. If they make the decision to navigate through the Panama Canal, there is no going back after that to undo or detour, as if it were a trap.
The rainy season is coming very late in that region, while the canal needs three times the equivalent of New York City's daily water consumption. The channel is practically dependent on rainfall for replenishment.
If not enough rain is collected, The Wall Street Journal said in an analysis, the cut in the number of ships authorized to sail will remain, and those that succeed will have to pay high premiums. This will translate into an even higher price rise for cargo ship owners, such as US oil and gas exporters and Asian importers. Even under the impact of inflation, all these circumstances will have an impact and will ultimately put pressure on the prices of consumer goods.
Due to the fact that the draft has been reduced from 50 to 44 feet deep, many cargo ships have to empty containers before taking the passage.
Ricaurte Vásquez Morales, administrator of the Panama Canal, warned that the restrictions may remain for the rest of the year. He calculated a decline in earnings of about $200 million.
As a palliative, the Panamanian Government has contacted the US Army Corps of Engineers, which built the canal at the beginning of the 20th century, to do the project of diverting four rivers into the waterway, which would be added to the three that already feed it and with the flow greatly reduced.
