$900,000 more for traffic: massive traffic jams in front of the Panama Canal

Drought forces the Panama Canal operator to conserve water and reduce capacity. In front of the two entrances to the important trade route, many ships have to wait to pass – and the number is increasing every day.

The Panama Canal is one of the most important passages for world trade. However, as the water continues to drop, the authorities have restricted traffic. As a result, more and more ships are piling up in front of the 80-kilometer waterway that connects the Atlantic and Pacific oceans. More than 200 ships are now waiting to sail through the canal, some waiting nearly three weeks.

July is the rainy season in Panama, so usually 36 ships pass through the canal each day. But there has been a lack of rain for weeks. The reason is the “El Nino” weather phenomenon, which is exacerbated by climate change. This extent is “historically unprecedented,” according to the channel’s authority. Traffic reduced to 32 ships a day. During the past six months, the canal has witnessed an unusual drought with little rainfall and high evaporation at the same time.

The lack of water restricts shipping in the canal in two ways: first, larger ships have to reduce their draft by reducing their tonnage. On the other hand, the lock capacity is reduced. Because they use approximately 200 million liters of fresh water per use, which then flows into the oceans.

The canal is of great importance to international trade. About 3.5 percent of the world’s maritime trade is handled through it. Most of the ships stuck in traffic are tankers carrying materials such as gas and chemicals, and bulk carriers carrying materials such as grain, iron ore, coal, cement and fertilizer. They are usually booked at short notice.

170 countries affected

On the other hand, in the case of container ships, the effects have been minor so far. Because they drive on long-term schedules and routes. Shipping companies book their passage through the canal up to a year in advance. They are therefore given preferential treatment by the Canal Authority and do not have to wait at all or a little. However, this does not apply to all container shipping vessels. The Washington Post quoted a manager at Maersk Shipping as saying: “We had two ships that couldn’t book, and it became very expensive.” “We went to an auction and paid $900,000 per ship on top of the normal $400,000 to allow passage.”

According to the Reuters news agency, about 170 countries and nearly every type of commodity is affected by the restrictions – including soybeans, liquefied natural gas from the United States, copper and fresh cherries from Chile and beef from Brazil. Ships destined for the United States carry Barbie dolls, auto parts, solar cells, water purifiers, and diabetes testing kits on board.

Freight forwarders have few alternatives, all of which cost money and tend to make goods more expensive. You can carry less cargo, take alternative routes that add thousands of nautical miles to the journey, or queue in front of the canal. Some companies are diverting ships loaded with coal and liquefied natural gas to the Egyptian Suez Canal.

Lack of precipitation in the region may become the new normal due to climate change. Against this background, the canal operator wants to divert four more rivers into the canal in addition to the three rivers that already feed the canal. The project is scheduled to be implemented within ten years at a cost of about $2 billion.

Meanwhile, the situation at the entrance to the Panama Canal does not appear to be calming down any time soon. According to the authority, the capacity will remain limited to at least 32 ships per day until the beginning of September.