Mumbai, August 16(Commoditiescontrol):A severe drought, intensified by El Nino conditions, is impacting operations along one of the largest shipping channels in the world. The Panama Canal, which handles approximately 40% of all U.S. container traffic, is currently affected by the ongoing drought, with ships starting to back up as the canal restricts the amount of traffic it can handle.
The Panama Canal Authority, the organization responsible for managing the canal, has decided to restrict both the number of ships passing through each day and the amount of cargo they can carry. Officials have stated that they are taking this action due to a decrease in the water supply caused by the ongoing drought.
The waterway in Panama, which connects the Atlantic Ocean with the Pacific Ocean and divides North and South America, plays a crucial role in global trade. The reduction in capacity means that fewer than 34 ships can move through the canal in both directions daily, compared with the 34 to 42 ships it can handle at peak capacity.
This restriction follows a decision made in June to reduce the maximum draft for new-Panamax vessels by 6 feet, which now stands at 44 feet.
With the new restrictions set to remain in place until Monday, August 21, companies may be forced to find alternative routes. However, according to the Journal of Commerce, the current constraints have not yet caused many shippers to change their plans significantly.
The U.S. remains the largest user of the Panama Canal, accounting for 73% of the commodity export and import container traffic.
The latest restrictions come as the drought has significantly reduced the water level of Gatun Lake, which provides the fresh water necessary for the canal’s locks. The current level of Gatun Lake stands at approximately 79 feet, notably lower than the five-year average of 85 feet.
The situation is causing concern for many industries, as delays in shipments can have substantial ripple effects across the global supply chain, potentially affecting everything from consumer goods to industrial equipment.
"The Panama Canal is an integral part of our global trade infrastructure," said Maria Luisa Castillo, a spokesperson for the Panama Canal Authority. "We understand the critical role we play in global commerce, and we are implementing measures to conserve water and sustain operations. However, we are dependent on weather conditions, which are unfortunately beyond our control."
The Canal Authority is closely monitoring weather forecasts and the state of the water levels in Gatun Lake. Authorities are also in active discussions with shipping companies, exploring potential solutions to minimize disruptions to global trade.
In the meantime, shippers, freight forwarders, and maritime carriers are advised to stay in close contact with the Canal Authority and review contingency plans, as further restrictions or changes to schedules may be implemented if the drought conditions persist.
For more information on the Panama Canal’s current operating status and any further updates, shippers and concerned parties are encouraged to visit the official Panama Canal Authority website or contact their representatives directly.
(By Commoditiescontrol Bureau; +91-9820130172)
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