Panama Canal slowly returning to normal to help ships transit

There is some good news for trade using maritime transport with the Panama Canal, the 82-km waterways connecting the Atlantic Ocean with the Pacific Ocean, slowly returning to normal. The Panama Canal Authority has unveiled a series of measures aimed at optimising transit operations while ensuring safe navigation through the waterway.

Effective May 16, 2024, through May 31, 2024, the number of daily transits through the Panamax locks will rise from 17 to 24. Starting June 1, 2024, the number of daily transits through the Neopanamax locks will increase from 7 to 8.

In addition to these adjustments, the maximum permitted draft for vessels transiting the Neopanamax locks will be raised to 13.71 m (45 feet) from June 15 onwards, up from the current limit of 13.41 m (44 feet). This adjustment in draft allowance is informed by careful analysis of water availability and takes into account projections for Gatun Lake levels, ensuring optimal conditions for navigation.

“The decision to implement these measures follows extensive analysis and monitoring of water resources,” the authority said.

Vital link

While Suez Canal provides a vital link between Asia and Europe, the Panama Canal is a critical route between Europe and the US. Ships continue to avoid Suez Canal due to attacks by the Houthi terrorists and go via the Cape of Good Hope in southern Africa.

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The Panama Canal has been a major thoroughfare for international trade for over 100 years, connecting nearly 2,000 ports in 170 countries. In 2022, over 14,000 transits were completed through the canal by ships carrying more than 291 million long tonnes of cargo.

The main route using the waterway by cargo tonnage runs between the US East Coast and Asia. It is followed by the US East Coast and the West Coast of South America, Europe and the West Coast South America, the US East Coast and the West Coast of Central America, and the South America intercoastal route.

The grain flows originate in US ports located on the Gulf of Mexico region destined for Asia. Similarly, soybeans and corn are the most prominent commodity crops that navigate the Mississippi river to be shipped through US ports bound in Asia. In the return direction cargo like textiles and leather from India that go via Europe will take the Panama Canal, according to a source.

“There will be relief for the maritime trade with more ships to transit via the Canal, and, in turn, leading to better rotation of the containers from and to the US,” said an official of a large shipping line.

The Panama Canal locks at each end lift ships up to Gatun Lake, an artificial freshwater lake 26 m above sea level created by damming up the Chagres River and Lake Alajuela to reduce the amount of excavation work required for the canal, and then lower the ships at the other end.

In recent months, however, traffic through the canal has slowed due to a prolonged drought that has diminished the amount of available water used to fill the canal locks, which require 101,000 cu m of water to fill. The water is drawn from the nearby lakes.

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McKinsey & Company in a recent report said that an estimated 2.5 per cent of global seaborne trade sails through its locks in an average year. In 2023, there were more than 14,000 vessel transits on this pathway between seas. The operation of the canal’s locks — which use gates to raise or lower water levels in different sections of the canal — depends on water from Gatun Lake.

Learnings

Ilya Espino de Marotta, Deputy Administrator and Chief Sustainability Officer, Panama Canal Authority, in a report on lessons from the Panama Canal, said that the Canal is estimated to support more than $440 billion worth of cargo annually.

“The Canal is no longer just a barometer for global commerce, but now an indicator of mounting challenges posed by climate change. Rainfall patterns have shifted and become more unpredictable in recent years, though we experienced a severe drought during what should have been the rainy season last year. The cause was a combination of an intensifying El Niño climate cycle and record-breaking global warming driven by climate change.

“Faced with low water levels at the Canal’s reservoirs, which are essential to its operations, we were forced to start restricting transits for the first time ever. This decision was crucial to guaranteeing a sustainable supply of freshwater for both human consumption and the uninterrupted functioning of transit operations during the impending dry season.

“Although we have managed to steadily increase transit slots since then, with plans to offer 32 in June, this recent drought at the Canal not only highlights the vulnerability of our water systems but also underscores the urgent need for innovative and collaborative solutions. To tackle water scarcity challenges effectively, we have learned that we must adopt a multifaceted approach that encompasses technology, policy reforms, and community engagement,” she said.

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