Freight vessels are seeing the highest levels of waiting times to traverse the Panama Canal since 2022, as a severe drought in that country is forcing the facility to tighten restrictions on maritime operations, according to supply chain visibility provider project44.
Some ships are experiencing delays of up to three weeks before they can pass through the canal, a delay that could cause “significant downstream consequences” as the affected cargo gradually arrives at its final destination, Chicago-based project44 said. Those outcomes could include: a spike in container lead times, shortages and rising costs for consumer goods, and trade patterns shifting to the U.S. West Coast.
Historic drought patterns in Central America had already caused low water levels in the Panama Canal, forcing authorities in July to slap draft limits on vessels passing between the Atlantic and Pacific oceans, meaning ships could carry fewer containers.
Those conditions have since gotten even worse, and on August 8, the Panama Canal Authority implemented new rules including:
- reducing the booking slots available for the largest vessels from 23 to 14
- lowering the daily allowance for vessel passages (regardless of size) from a range of 34-36 to a fixed 32
- lowering the maximum draught restriction to 13.41 meters, reducing the amount of cargo vessels can carry
According to canal leaders, they were forced to make the changes in order to adapt to “unprecedented challenges” and to balance the critical issues of freshwater availability for both the population’s consumption and the transit of vessels.
“Since the previous drought in 2019-2020, the Canal has been implementing procedures to improve water efficiency in its operations while conducting studies to identify long-term solutions to climate variability. Yet, current severity and its recurrence has no historical precedence,” Ricaurte Vasquez Morales, the Panama Canal Administrator, said in a release. “Accordingly, the Panama Canal is constantly assessing the situation with respect to current and expected reservoir levels to ensure the necessary adjustments in terms of maximum draft, capacity and reservation slots available are duly communicated to clients.”
The new “Condition 3” regulations will be in effect until at least August 21.
“We’ve had long lineups of ships before. Global events such as climate variability like this year’s, seasonal fog in the Culebra Cut, scheduled maintenance outages, and peak season are the usual causes for increased waiting times. Despite current limitations and measures taken, demand remains high, hence the increased waiting times,” Morales said.
