Severe drought, a product of the El Niño phenomenon and the extension of the dry season, set off alarms in the Panama Canal, forcing the interoceanic waterway to take drastic measures to face this unprecedented situation in 2023.
Some of them are the reduction of daily transits until next year, the draft of vessels and the variable rate charged for the use of fresh water, which will have an economic effect in the fiscal year 2024, inclusive from October 1 of last year to September 30 of next year.
One of the direct effectsthere was a traffic jam to enter the canal, with up to 160 ships waiting, mostly vessels without reservations, i.e. without a planned crossing, and these are mostly ships for transporting bulk cargo, ships for transporting gas, tankers for transporting chemicals.
For this Friday, there were 75 ships in the lines, 47 with a reservation and 28 without one, according to data from the interoceanic waterway, a relevant world trade route that, under normal circumstances, transports 500 to 510 million tons of cargo annually.
A hot year, the level of the main lake drops
Due to the El Niño phenomenon, the average accumulated rainfall in the canal’s hydrographic basin – approximately 350,000 square kilometers in the heart of the highway – for 2023 is 25.6% less than the average for the last several years. 73 years old, according to official information.
“This year we are facing the problem of water deficit. As for the rain, in the period from January 1 to December 5and compared to the historical record from 1950 to the present, (2023) is the third year with less rain or drought in the last 74 years,” Guerra said.
The channel had previously warned that less rain had fallen in the country for two decades. Last October was the driest month on record with 41% less rain than usual.
Therefore, the water level of Lake Gatun, the main source of the canal, dropped to approximately 81 feet PLD (Precise Level Datum) compared to 88 feet PLD in a “normal year,” an atypical situation in December at the beginning of the dry season in Panamaexplained Guerra.
The Panama Canal is exploring the possibility of creating a new reservoir of water, a decision that falls in the hands of the executive branch.
Economic consequences
The Panama Canal has gradually reduced the number of daily transits this 2023 until it reached 31 ships in November, with 18 ships expected to cross next February, according to forecasts.
“The forecast is that there should be 20 transits in January, and 18 in February. We are evaluating this (…) and monitoring it every day because if there is perhaps rainfall like in November, the accumulated rain was 300 millimeters and that helped a little to improve the situation,” canal hydrologist supervisor Nelson Guerra told EFE.
The Panama Canal could lose about $200 million in revenue in 2024 due to the reduction in daily transits it was forced to implement because of the drought, its administrator Ricaurte Vásquez said last August.
In September, the road announced as compensation a reduction of about 50% in the variable rate it charges for fresh water use due to low rainfall this year in Panama, a country with only two seasons, dry and rainy.
Despite this, and in view of the reduction of daily transits, as well as traffic congestion at the entrance to the canal, some shipping companies have decided to explore alternative routes, although they could be longer and more expensive, as reported by the local press, citing specialized media.
Source: Panama America
I am Jason Root, author with 24 Instant News. I specialize in the Economy section, and have been writing for this sector for the past three years. My work focuses on the latest economic developments around the world and how these developments impact businesses and people’s lives. I also write about current trends in economics, business strategies and investments.
