Drought is impacting operations along one of the largest shipping channels in the world. The Panama Canal, which handles about 40% of all U.S. container traffic, is now impacted by drought with ships starting to back up as the canal restricts the amount of traffic it can handle.
The organization responsible for managing the canal has decided to restrict both the number of ships passing through each day, as well as the amount of cargo they can carry. Officials say they’re taking this action due to a decrease in the water supply caused by the ongoing drought due to El Nino conditions.
The waterway in Panama connects the Atlantic Ocean with the Pacific Ocean and divides North and South America. The reduction means fewer than 34 ships can move through the canal in both directions daily, compared with the 34 to 42 it can handle at peak capacity.
This follows a decision in June to reduce the maximum draft for new-Panamax vessels by 6 feet, now at 44 feet.
With the new restrictions in place until Monday, August 21, it could force companies to find alternative routes, however, Journal of Commerce it hasn’t forced many shippers to change plans just yet.
The U.S. is by far the largest user of the Panama Canal accounting for 73% of the commodity export and import container traffic.
The latest restrictions come as a drought has reduced the level of Gatun Lake, which provides the fresh water for the canal’s locks, to about 79 feet, compared with a five-year average of 85 feet.
