Long Wait at Panama Canal Shows the Power of El Nino
The number of ships waiting to cross the Panama Canal was 45 higher as of Tuesday than the maximum the waterway’s authority likes to keep waiting, reflecting the impact of a drought exacerbated by the El Nino weather phenomenon.
Of the 135 vessels waiting for passage at both the Atlantic and Pacific entrances, 53 have made reservations and will transit the canal as scheduled, the Panama Canal Authority (PCA) said Tuesday.
Vessels that haven’t made reservations will have to wait for nine to 10 days to pass through the canal, up from the typical five days, the PCA said.
Broadly speaking, the PCA’s goal is to keep the number of ships waiting to cross the canal under 90.
The Panama Canal is a key trade link for shippers heading to America’s East Coast from the Pacific. Chinese ships are the second-largest users of the canal with nearly 62 million tons of freight traffic in fiscal 2022, accounting for around 12% of the total canal traffic in that period, according to the authority’s annual report.
In recent months, the PCA has restricted the number of ships allowed to make the crossing. It has also restricted how low ships can sit in the water during their passage due to water conservation measures in response to the drought.
Container ships transporting goods through the Panama Canal have had to lighten their loads by 40% to meet the PCA’s requirements, according to several people working in the logistics industry.
Ships that have been more severely affected by the delays are mostly oil tankers, dry bulk carriers, general cargo ships and LPG ships, according to analysts at China Futures Co. Ltd. The congestion at the Panama Canal may lead to a rise in sea cargo fees. A person from a shipping company said that the rates for ships transporting bulk goods via the canal may surge during the peak export season for commodities, which runs from October to December.
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