Panama Canal Grapples with Unprecedented Backlog as Drought-Induced Challenges Escalate

Strategic Dilemmas for Shippers: Navigating Operational Constraints and Exploring Alternatives

Canal de Panama

In a significant development in the maritime sector, the Panama Canal is currently grappling with a substantial backlog, with a total of 123 ships awaiting transit. This figure markedly surpasses the seven-year average of 90 ships, a metric calculated since the canal’s expansion. Notably, the canal experienced its most challenging period in August of the current drought-afflicted year when the queue extended to over 160 ships.

Attributed to the prevailing drought conditions, the canal’s management has been compelled to implement drastic measures, including a reduction in draft limits for its larger locks. Furthermore, in response to the escalating situation, the management has introduced progressively stringent daily transit cuts. By February of the upcoming year, the number of permissible daily transits will witness a significant reduction, plummeting from the present maximum of 40 to a mere 18 ships.

Confronted with these operational constraints, numerous shippers and shipowners have opted for alternative routes. This strategic decision is motivated by the realization that the available slots, primarily dominated by containerships, are set to be severely limited in the ensuing months.

Judah Levine, the Head of Research at Freightos, an online box booking platform, remarked on the challenging predicament faced by shippers contemplating the movement of goods between the United States and Asia. The options of waiting in queue, incurring additional expenses, or navigating around South America underscore the complexity of decisions now confronting stakeholders in the shipping industry.

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