Why Panama canal will reduce shipping from September 3
What's the story
The Panama Canal, a key waterway connecting the Atlantic and Pacific Oceans, will be reducing its daily ship traffic from September 3. The decision comes in light of severe drought conditions caused by the El Nino phenomenon. The Panama Canal Authority has announced that the number of vessels allowed through each day will be reduced from 36 to 34 due to low water levels in two artificial lakes that supply water to the canal.
Weather effects
El Nino's impact on Panama Canal
The Central American region is currently experiencing a severe drought due to El Nino, a weather pattern that raises surface temperatures in the Pacific Ocean.
This phenomenon leads to global changes in winds, atmospheric pressure, and rainfall.
The Panama Canal Authority has reported that rainfall in the canal area from May to August is down by 34% from its historical average.
Trade significance
Impact on global trade
The Panama Canal is a vital link in global maritime trade, accounting for 5% of it and handling about 40% of US container traffic.
The canal operator has already taken other water conservation measures such as reducing the maximum draft for larger ships.
In 2023, low water levels in the lakes led to a drastic reduction in daily ship transit numbers from 38 to just 22.
Shipping delays
Increased waiting times for vessels
The upcoming reduction in daily ship traffic is likely to increase waiting times for vessels trying to pass through without a prior reservation.
As per the canal operator, nine out of 10 ships using the canal do so with a reservation, while the remaining slots are auctioned off.
The operator has not ruled out further restrictions on shipping depending on rainfall in the coming weeks.
Drought alert
Drought alert in Honduras
El Nino occurs every two to seven years, and this year's event is expected to be one of the strongest on record.
The government of Honduras has already placed 80% of its territory on drought alert.
The lakes that feed the canal also provide water for half of Panama's 4.2 million people, making water a sensitive issue in the country.