Panama Canal

How climate is affecting the Panama Canal traffic and thus worldwide shipping.

Since 1914, the Panama Canal has been a strategic shortcut for ships sailing to and from Asia and the East and West Coast of the United States. This crucial waterway saves cargo ships weeks of circumnavigating Chile by guiding them through a network of locks over the Panamanian mountains. Currently the water levels in the main lake, called Gatun Lake, are not sufficient enough to carry on with the usual amount of cargo ships transiting, due to an untypical long dry spell.

Panamanian authorities attribute the diminishing water levels to the El Niño weather phenomenon. In the month of October the region experienced nearly half the usual rainfall, and with two months remaining in the rainy season, there is an impending risk that Gatun Lake's water levels may dip below the critical 50 percent mark. This not only endangers the canal's functionality but also poses a threat to Panama's overall water supply, including its drinking water reserves. To deal with this tough situation, the Panama Canal Authority has implemented a rule called ‘’Advisory to Shipping No. A-48-2023’’. This new rule implies that the amount of cargo ships transiting through the canal per day, has to be reduced from 35 to 18 transits per day until January 2024.

Implications for Sevenstar Yacht Transport: • Extended waiting times in front of the canal of about four to eight weeks. Significantly higher costs for booking slots and the threat of not being able to go through the Canal at all. • Consideration of alternative routes, such as navigating via the Suez Canal or the Cape Horn. • Reduced availability of ships in this area, leading to an increase of freight rates due to heightened uncertainty. • Unpredictable arrival dates. • Current forecasts anticipate that the situation isn’t going to improve until September 2024.

Impact for our customers going through the Canal by themselves: • Currently, clients can still utilize the canal. The waiting time to go through the Canal is unpredictable though and can range between two hours and two weeks. • Uncertainty regarding future operations if even fewer ships are permitted to pass through.

To sum it up, the Panama Canal is having a tough time due to lack of rain, and it's effecting worldwide shipping. From extended waiting times and increased costs to unpredictable arrival dates, the ramifications are felt globally. Stakeholders are navigating these uncharted waters with adaptability and a keen eye on alternative strategies as they await relief from the challenging situation.