This article is written by Austin Garcia
The Panama Canal, a crucial shipping route, has been severely impacted by drought for the past 11 months. The canal, which spans a 50-mile stretch of the narrow Panama isthmus, was completed and opened in 1914 under the leadership of George Washington Goethals. The Panama Canal Authority (ACP) has been forced to reduce daily transits and draft levels since May due to the persistent drought. The El Niño weather phenomenon has exacerbated the situation, leading to a large portion of the global merchant fleet choosing to bypass the canal due to long waiting times and elevated toll fees.
However, three weeks ago, the ACP increased the daily transit slots at its Panamax locks by three, bringing the total daily maximum transits to 27. This is still more than 10 below the canal’s usual maximum, but it is clear that the situation is improving. Maersk, a Danish shipping giant, confirmed the improving water levels along the canal today by announcing the reinstatement of a service that had previously been switched to a rail land transit across the Central American country during the peak of the drought crisis.
Map of the Panama Region
The restrictions on transits through the Panama Canal have resulted in a one-third reduction in tonnage transits, with 46 ships in line to transit the canal, a significant decrease from a peak of over 160 last August. The ACP’s latest projections show that water depths at Gatun Lake, a crucial body of water in the middle of the canal, are expected to rise rapidly towards the end of May as the rainy season commences.
In 2021, substantial infrastructure enhancements were implemented at the Port of Houston, which significantly expanded the port’s ocean freight capacity, enabling it to handle a larger volume of cargo and bolstering its position as a key player in global shipping. With recent events, a possible return of the route to Houston, Texas is incredibly likely.
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