El Niño-induced drought leads to reduced Panama Canal ship transits from 36 to 29.5 daily, impacting global trade logistics.
The increasing impact of drought caused by El Niño has brought new measures to the forefront at the Panama Canal, a critical transit point for global trade. The canal management plans to reduce ship transits again due to falling water levels.
Transit numbers will be reduced in October.
According to a draft plan presented to the Panama parliament, it is anticipated that an average of 29.5 ships will be allowed to transit the canal daily starting in October. This represents an approximately 18% decrease compared to the daily transit number of 36 in August.
Officials had also reduced daily ship transits from 36 to 32 in September due to the effects of the drought.
One of the important transit points for global trade.
The approximately 82-kilometer-long Panama Canal plays a strategic role in maritime transportation between the Atlantic and Pacific Oceans. The canal handles about 5% of global maritime trade and manages approximately 40% of container traffic in the United States.
Companies using the canal, especially for trade between Asia and the United States, benefit from shorter transit times and lower logistics costs.
The crisis in Hormuz has also increased logistics costs.
The capacity issues at the canal, along with other disruptions in global maritime transportation, are further increasing costs for companies.
Disruptions in the Strait of Hormuz and conflicts in the region have complicated logistics chains, increasing pressure on alternative routes and critical transit points.
In August, it was reported that some ships waited up to 10 days to enter the Panama Canal. This waiting period was noted to be the longest since May, with reports indicating that a container ship paid approximately 4 million dollars to move ahead in the queue.
Millions of dollars in bids for transit priority.
Maritime companies normally pay a fixed fee for transit through the canal. Additionally, in daily auctions, shipowners can bid to move ahead in the queue.
During periods of high demand, auction prices can reach significant levels. The renewed reduction in transit capacity due to drought carries the risk of further increasing these costs.
The fate of the canal depends on water levels.
The operation of the Panama Canal relies on a lock system that raises ships to Gatun Lake, which is approximately 26 meters above sea level. Freshwater from rivers feeding the canal is used to operate this system.
If water levels drop to a point that does not allow for the safe passage of large vessels, the Panama Canal Authority restricts transits to ensure safety and conserve water resources.
In 2023, ship transits had dropped to 22.
The impact of drought on the canal had previously reached serious levels.
In 2023, due to a sharp decline in water levels in the lakes feeding the canal, daily ship transits were reduced from 38 to as low as 22. The restrictions implemented led to the formation of a significant queue of large vessels at the canal, directing companies to alternative routes.
Concerns about El Niño are growing.
It is indicated that the risk of drought may increase further in the upcoming period. The expectation that the El Niño weather phenomenon will peak in the later months of the year is raising concerns about transportation conditions in the Panama Canal.
El Niño is expected to cause significant changes in wind, air pressure, and precipitation patterns, with Central America and the northern parts of South America being strongly affected by the weather phenomenon.
Extreme heat is increasing its impact worldwide.
The climatic conditions behind the canal crisis are not limited to Panama. According to the analysis of meteorological data obtained from the European Union's Copernicus program, seasonal temperature records were broken in many countries during the June-August period.
Extreme heat and drought were also notable in Central and South America, as well as Africa. High temperatures and lack of rainfall affected various parts of the continent, particularly the Sahel region.
Seasonal temperature records were recorded for the June-August period in 18 African countries, ranging from Mauritania and Sierra Leone to Eritrea and Ethiopia.
Source: SeaNews Türkiye
