Panama Canal to Cut Daily Transits again as El Niño Drought Deepens

• The Panama Canal plans to further reduce maritime traffic as drought caused by the El Niño climate phenomenon worsens, choking one of the world's most important shipping lanes. The canal handles 5% of global maritime trade and about 40% of US container traffic and is favoured by shippers because it usually lowers costs and transit times, especially for companies trading between China, Asia and the US.
• From October, an average of 29.5 vessels will be allowed to transit daily, down 18% from 36 in August, according to a draft plan submitted to Panama's parliament. Officials had already cut daily transits from 36 to 32 in September because of the drought.
• Congestion has pushed the cost of passage sharply higher. In August, with vessels waiting 10 days to enter the canal, the longest wait since May, a container ship reportedly paid about US$4 million to jump the queue. Maritime companies usually pay a flat fee to reserve a transit slot, but a daily auction allows shipowners to bid to skip the queue, and bid prices generally rise during periods of high demand. The US and Israel's war on Iran, and the related disruption to the strait of Hormuz, has complicated logistics and added costs for shipping companies using the canal.
• The 82km canal, connecting the Caribbean Sea to the Pacific Ocean, relies on fresh water from rivers pouring into Lake Gatun to operate its system of locks. The locks act like elevators, each filling with water to lift ships 26 meters (85 feet) from sea level to Lake Gatun and then back down to sea level on the other side. Officials said in September that the watershed had received lower than forecast rainfall, and when lake levels are no longer safe for the largest ships to pass, the Panama Canal Authority imposes restrictions for safety and to preserve water.
• Restrictions could tighten further, with El Niño expected to peak later this year and forecast to be the strongest in four decades. The pattern brings worldwide changes in winds, air pressure and rainfall. There is recent precedent for deeper cuts: in 2023 the water level in the lakes feeding the canal was so low that authorities reduced daily transits from 38 to 22, creating a bottleneck of ships and sending companies scrambling to find alternative routes.
• The wider climate backdrop is severe. Nine countries in Central America and northern South America recorded their hottest June to August period on record this year, and 52 countries across all continents broke their seasonal temperature records for that period, according to an Agence France-Presse analysis of meteorological data from the European Copernicus programme. Eighteen African countries broke seasonal records, from Mauritania and Sierra Leone in the west to Eritrea and Ethiopia in the east, with more than a third of the people experiencing record northern summer heat located in Africa.

(Source: The Guardian)