A severe drought has forced the Panama Canal to reduce shipping traffic. Authorities have limited the number of cargo ships in the canal due to a lack of rainfall that has depleted the water reserves of two artificial lakes supplying the vital waterway. As a crucial part of global maritime shipping, the canal sees approximately 6% of global shipping traffic, including several million tonnes of cargo to and from Australia annually.
The water supply crisis is threatening the future of this important maritime route which links the Atlantic and Pacific oceans. This operational uncertainty may prompt shipping companies to seek alternative routes, emphasizing the need to find long-term solutions to guarantee the canal’s functioning.
The two artificial lakes — Alajuela and Gatun — have seen significantly reduced water levels, with Alajuela dropping by 7 metres between 21 March and 21 April. The 200 million litres of fresh water required to move each ship through the canal’s locks up to 26 m above sea level come from these two lakes. In the 2022 fiscal year, over 14,000 ships carrying 518 million tons of cargo traversed the canal.
This is the fifth time this drought season, which lasts from January to May, the Panamanian Canal Authority (ACP) has had to limit the largest ships passing through.
In 2016 the ACP christened a larger set of locks capable of handling the much bigger New Panamax ships, with great fanfare. A giant Chinese-chartered freighter, named COSCO Shipping Panama especially for the occasion, made its way along the 80-kilometre waterway linking the Atlantic and Pacific oceans. Its passage was to show off the third shipping lane and gargantuan locks built into the canal catering to vessels of its class, known as Neopanamax class vessels.
On that occasion, the ship stopped in the locks giving access to the Pacific, where VIPs and 25,000 Panamanians had gathered to celebrate the inauguration. The freighter’s horn bellowed out triumphantly several times, triggering applause and cheers from the flag-waving crowd before they were treated to fireworks and a song-and-dance show relating the history of the canal.
Readers will recall the panic when the Suez Canal was blocked by the containership Ever Given just two years ago. Together, the Suez and Panama Canals form vital arteries in the movement of cargo vessels around the globe.
According to Grain Brokers Australia, “El canal de Panamá is perhaps the most crucial piece of infrastructure supporting the free flow of international trade in the western hemisphere. In fact, the waterway is crucial to just about every economy in the world as we all rely on the import and export of goods and services to sustain life, GDP and economic growth.”
An article by Young Australians in International Affairs says, “A failure to address the drought could have far-reaching implications for global trade. A constrained or non-functioning canal would remove the main passageway connecting the Atlantic with the Pacific. In such an event, maritime freight companies would have to consider navigating past the southern tip of South America; blowing out costs and shipping times considerably. Alternatively, these companies might reconsider their need to navigate through either route entirely.”
As licensed Customs Brokers and International Freight Forwarders, Colless Young offers you professional advice on all your overseas trade and shipping requirements through every major port on the globe. We provide a complete range of import and export logistics services, by air and sea, including Customs clearance, warehousing and trucking, at all major Australian ports and airports.
