The Panama Canal faces further restrictions due to the drought. Transporting goods can become more expensive

The Panama Canal faces further restrictions due to the drought. Transporting goods can become more expensive
The Panama Canal faces further restrictions due to the drought. Transporting goods can become more expensive

At the same time, the costs of transporting liquefied natural gas (LNG) from the United States are already higher, analysts point out.

Starting Friday, November 3, the channel management will reduce the number of booking slots to 25 per day. Currently, a maximum of 31 ships per day can use the canal, which is already a reduced number. In the next three months, the ACP will issue even fewer permits, reducing the number of slots to 18 per day from the beginning of February next year, the canal authority said.

Lake Gatun is important for the operation of the Panama Canal, which receives water from rainfall. The lake is then the main source of water that is used in the canal lock system. However, the Canal Authority says the lake’s water level continued to drop in October to unprecedented levels for this time of year.

Citing analysts, S&P Global said long queues of ships in front of the canal tend to drive up sea freight prices. Vessel operators can either ask for more money or use a longer route, which will be more expensive. The Panama Canal allows for the cheapest shipping of LNG from the United States to Asian markets.

Big delays

The Canal Authority has introduced various restrictions in recent months to conserve water. This year, for the first time in the waterway’s existence, authorities have reduced the number of ships passing through the canal, the BBC reported. The measures already in place caused major delays, dozens of ships had to wait to use the canal.

Those delays have also pushed up shipping prices elsewhere in the world as fewer vessels are available, an analyst at the US government’s Energy Information Administration (EIA) warned. For example, delays at some gas carriers were record high in Panama, raising the cost of shipping liquefied gas from the US.

The Canal Authority said this year’s October was the driest since records began in 1950. Contributing to the severe drought, it said, is the El Niño, a natural climate phenomenon that recurs irregularly and causes water in the central and eastern Pacific Ocean to warm.

“Recorded precipitation for October was the lowest since records began in 1950 (down 41 percent). The year 2023 is so far the second driest for a comparable period,” the canal administration said.

The Panama Canal significantly shortens the time and distance for ships to travel between the Atlantic and Pacific Oceans. It is in service around the clock and according to ACP, 13,000 to 14,000 ships will use it annually. It is a key waterway for maritime transport in the world, similar to, for example, the Suez Canal in Egypt.

The crane sailed first

The construction of the canal between 1904 and 1914 cost the Americans 375 million dollars (in today’s prices it would be tens of billions of dollars). The first ship, an old floating crane, sailed through the system of three locks and lakes in January 1914, and seven months later the canal was inaugurated. Just one year later, however, it was blocked by a large-scale landslide, and regular operation could only begin again in 1920. Since then, however, the Panama Canal has served world shipping reliably.

It has always been of great importance, especially for the USA, but over the years, opposition to the fact that the Americans control the most important part of the economy grew in Panama. In 1977 the US agreed to hand it over to Panama. In 2000, the Panamanian government took over the canal from the USA, which annually collects around one billion dollars (24.7 billion CZK) in fees for its use.

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The article is in Czech

Tags: Panama Canal faces restrictions due drought Transporting goods expensive


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