What’s causing the Panama crisis ?

The Panama Canal Authority has reduced maximum ship weights and daily ship crossings in a bid to conserve water. Maritime transportation experts fear such events could become the new normal as rainfall deficits in the world’s fifth-wettest country spotlight climate risks affecting the ocean shipping industry that moves 80% of global trade

Ship owners have the options of carrying less cargo, shifting to alternate routes that can add thousands of miles to the trip or grappling with queues that earlier this month backed up 160 vessels and delayed some ships by as much as 21 days.

The restrictions already are sending China-U.S. spot shipping prices up as much as 36% amid soaring sea temperatures that climate scientists warn could supercharge extreme weather.

Canal operators are on a tightrope as they work to manage maritime trade disruption and prepare for what is shaping up to be an even drier period next year. More than 14,000 ships crossed the canal in 2022. Container ships are the most common users of the Panama Canal and transport more than 40% of consumer goods traded between Northeast Asia and the U.S. East Coast


Barbie dolls, auto parts, BYD solar panels, water treatment equipment, diabetes testing kits and other goods pass through the canal Restrictions at the canal started earlier this year, affecting about 170 countnes and virtually every type of good- including soybeans and liquefied natural gas from the United States, copper and fresh chemies from Chile, and beef from Brazal Bulk carriers that transport commodities from com to iron ore, as well as tankers that move oil, fuel gas and chemicals also are affected some energy companies are rerouting vessels laden with coal and liquefied natural gas to the Suez Canal


A naturally occurring El Nino climate pattern associated with warmer-than-usual water in the central and eastern tropical Pacific Ocean is contributing to Panama’s drought.

The area around the canal is experiencing one of the two driest years in the country’s 143 years of keeping records. Water levels in Gatun Lake, the rainfall fest principal reservoir that floats ships through the Panama Canal’s lock system, have remained below normal despite accumulation from the current rainy season.

A potential early start to Panama’s dry season and hotter-than-average temperatures typical of major El Nino events in the country could increase evaporation from Gatun Lake and result in near-record low water levels by March or April 2024.

Picture Credit: Google

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