Ships are backed up, the supply chain is threatened, and the Panama Canal is clogged by a severe drought

Ships are backed up, the supply chain is threatened, and the Panama Canal is clogged by a severe drought

PANAMA – The Panama Canal, the lifeblood of global trade, is now facing one of its most challenging periods due to a severe drought.

It’s a sight not seen often: more than 130 ships are anchored off the coast of Panama, waiting their turn to cross the canal. Some may stay here for 10 days or more, or they may have to unload to cross the canal. This crowding is a result of the severe drought affecting Panama due to the El Nino weather cycle. The impact on shipping was significant, resulting in weight restrictions and fewer daily crossings.

The Panama Canal Authority said it is limiting traffic to 32 ships a day crossing the canal after months of drought and expects lower incomes in 2024 due to the ongoing water crisis. (AP Photo/Arnulfo Franco)

At a recent press conference, the director of the Panama Canal spoke on the subject, stating that they are doing everything they can to reduce the more than 50 million gallons of water that the canal uses daily.

“The reality is that the water variability is different, the rainfall pattern is different, and it is now necessary to adapt to a reality that cannot necessarily be resolved by the reservoir,” said Ricorte Vazquez Morales, director of the Panama Canal.

Consider this. On average, Panama receives up to 12 feet of rain annually. We almost got a foot in here just yesterday. last year? Some areas got over 19 feet. But herein lies the problem. The canal has no mechanism for storing excess water from wet years. So, when they get a lot of rain, it gets released into the ocean. And with nearly 50% less precipitation this year, it’s causing a serious bottleneck, affecting much of the produce destined for the East Coast of the United States.

“The depth and intensity of this crisis is really extraordinary, it’s very high, so we think that from now until September 30 next year we have to work with drought restrictions,” Morales said.

Morales also tried to reassure the public that the channel would remain profitable. The Panamanian government is concerned that continued drought conditions could prove disastrous for the entire country, as canal tolls make up more than 75% of the Panamanian government’s annual revenue.

He said, “International trade will always continue, so we will be here and produce many benefits for the country, from environmental protection to ship transit, and we will be an example of economic success with social and environmental responsibility.”

The peak rainy season won’t hit until October, but if low rainfall numbers persist, the US may need to prepare for more supply chain disruptions.

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