Panama Canal Drought Slows Cargo Traffic The New York Times

Table Of Content

• Anthem of the Seas: The complete guide to everything on board
• Long delays at Panama Canal after drought hits global shipping route
• NCL Closes Loophole, MGM Status Match, Stupid TikTok Cruise Trend, Cruise Travel Essentials and Top Card Offers
• Cruisers are getting younger as Gen Z and Millennials take to the seas
• Drought Saps the Panama Canal, Disrupting Global Trade

Ships that usually crossed the canal in two-and-a-half days had to wait more than nine to make the journey, Insider previously reported. An expansion completed in 2016 added two new locks to accommodate significantly larger “neo-Panamax” ships, which are bigger, heavier and require deeper water to move through the corridor when fully laden. A previous Times investigation found that canal officials ignored warnings that they would need new sources of water in order for the expansion to succeed. “The fact that the Panama Canal operates on freshwater is a major disadvantage compared to other water routes,” said Ricaurte Vásquez Morales, the administrator of the Panama Canal Authority, in a video address last month.

Anthem of the Seas: The complete guide to everything on board

Panama opens new cruise ship terminal at mouth of canal - Woburn Daily Times

Panama opens new cruise ship terminal at mouth of canal.

Posted: Tue, 26 Mar 2024 07:00:00 GMT [source]

The authority holds auctions whenever a ship with a reservation cancels, and slots this year have gone for as much as $4 million. A year ago, the average auction price was around $173,000, according to data from Waypoint Port Services. “It’s just astronomically out of control,” said Francisco Torné, one of the firm’s country managers for Panama.

Long delays at Panama Canal after drought hits global shipping route

Evergreen’s Ever Max for example offloaded 1,400 TEU or nearly 10 percent of her load to make a transit on August 1. Some of the major shipping companies have responded to these issues by announcing surcharges on bookings transiting the canal. CMA CGM starting September 1 is expanding its Panama Canal surcharge of $300 per TEU to additional routes including trips to the U.S. An extended dry season has reduced the availability of water, required to allow vessels to pass through the canal’s locks, which has triggered a logjam of ships awaiting their turn. Panama typically sees a dry season from January to May, but climate change has made rainfall patterns much less predictable. The result is that the increasingly severe droughts and extreme deluges can push canal infrastructure past its operational limits.

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Rising temperatures also evaporate a significant amount of moisture from the reservoir and its watershed. The lake that allows the Panama Canal to function recorded the lowest water level ever for the start of a dry season this year, which means that vastly fewer ships can pass through the canal. The extreme drought, exacerbated by an ongoing El Niño that is affecting Gatún Lake and the whole region appears likely to last into May.

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The canal is favoured by many shippers as it usually reduces cost and transit times, especially for large retailers and energy companies that trade between China and the rest of Asia, and the US. Cutting through the narrow isthmus saves thousands of miles on trips that might otherwise need to route around the tip of South America or through the Red Sea, where Houthi attacks have thwarted traffic in recent months. Considering the potential long-term implications of the Panama Canal crisis, cruise lines may need to reassess their itineraries and operations, possibly resulting in fewer Panama Canal crossings or alternative routes.

As of June 1, the former category will be increased to 8, while the latter will remain at 24, for a total of 32 vessels. The number of ships that can travel through the vital route has fallen sharply this year because of a lack of water for the locks, raising costs and slowing deliveries. Peter Sand, the chief analyst at the freight market analytics firm Xeneta, said disruption at the canal could push short-term shipping rates higher and “prompt shippers to alter their supply chains”. Should the canal bottleneck worsen, it’s likely other major grain exporters such as Brazil, Ukraine and Russia may step in to fill the gap for US products in Asia, Paglia said. Already, Brazilian grains have been more actively traded because of the canal’s increased restrictions, he said.

The new measures were adopted after a slight return of rain so far in April, the ACP also said. As of June 15, the maximum draft allowed for ships passing through the new neopanamax locks will be 13.71 meters to ensure “safe navigation,” the ACP added. However, maintenance work from May 7 to 15 will reduce the number of transits through the Panamax locks from 20 to 17 per day.

Cruisers are getting younger as Gen Z and Millennials take to the seas

Money for an auctioned slot comes on top of the canal’s usual transit fee, which depending on the vessel’s size can be close to $1 million. Relax and enjoy picking your excursions and reading up on the canal history and the wonderful ports and countries you will visit. Just a bit nervous as this drought persists and the cruise lines likely to get hit with additional fees. It is a priority for CBC to create products that are accessible to all in Canada including people with visual, hearing, motor and cognitive challenges. Mr Paton said that if that continues, it will be increasingly difficult for the canal to guarantee that the largest ships are going to be able to get through. The frequency of major El Niño drying patterns has risen significantly during the last 25 years of the canal's 109-year history.

Drought Saps the Panama Canal, Disrupting Global Trade

Cruise ships pay a hefty surcharge for a reserved transit date and time,  and the Canal Authorities are very willing to rake in this extra. Panama Canal Authority recently opened two more passage slots per day for ships that don't have have priority to pass, as container ship do, and this week the backlog had decreased since to 115 ships. Ship owners have the options of carrying less cargo, adding thousands of kilometres to their trips or grappling with queues that earlier this month backed up 160 vessels and delayed some ships by as much as 21 days. As many as 24 vessels will be permitted to pass through the system daily, up from 22 currently, the canal authority said in a statement Friday. The Panama Canal Authority further reduced the number of boats that can transit through the strategic waterway, which has been hit by an intense drought. Weather-related problems have been building at the canal for some time, prompting the ACP to pledge to save water during the rainy months, although it said that the economic impact was unavoidable.

Live maritime tracking websites showed about 140 vessels near the canal on Monday, a considerable increase from the level of about 90 ships usually seen in the area during the rainy season, which lasts from May to December. In a fresh demonstration of the impact of the climate crisis on global business and trade, the Panama Canal Authority (ACP), which manages the waterway, introduced restrictions on the number of transiting vessels as a result of the drought. So I think that I figured out why our cruise on Oceania Cruises this winter has now moved from Colombia to Panama, it’s because their sister line with much larger ships has shifted operations out of Panama and into Colombia. What I haven’t been able to determine is how much of this has to do with the drought and low water levels and how much of it has to do with the cruise facilities in Panama. Understanding the operational challenges posed by the Panama Canal’s low water levels is crucial for cruise passengers affected by these cancellations. Aurora Expeditions and other cruise operators are likely exploring alternative solutions for affected travellers, such as rerouting or rescheduling their journeys.

So my suggestion is that if you’re booked on a Norwegian Cruise calling on Panama go check their website and see if your itinerary has been changed. There are four issues per year, with each issue is packed full of must-read features, including cruise news, reviews, destination guides and the most enticing itineraries. Travellers are advised to stay informed and flexible about their regional cruise plans and to contact their cruise operators for more information and guidance on the next steps.

Gatun Lake, which forms a key stretch of the canal system and provides fresh water for its locks, saw little rain this year, as El Niño triggered a withering drought. So the Panama Canal Authority has ratcheted back the number of ships allowed to pass, from an average of 36 to 38 per day in the past to an expected 18 in February, half the normal amount. The authority also reduced draft levels — how low a vessel can sit in the water — meaning some ships must carry less cargo. Even if the rains return on time next year, traffic congestion and draft restrictions will linger long into 2024. In 2023, Gatun Lake experienced water levels below seasonal norms due to insufficient rainfall.

“So, potentially, US grain exporters will be hit hardest by the disruption to trade flows,” Paglia said. Each choice adds cost, at a time when governments around the world are struggling to tame inflation. And the bottleneck will only worsen in the coming months as Panama enters its annual dry season, which typically begins in December and lasts until April or May. Based on the story, I'll suggest the cruise line have determined the ROI is insufficient due to high fuel costs, Canal costs and few ports to sell shore-ex. To put it in perspective, when sailing the Panama Canal shuttle many years ago, we were on 14-day cruises, with many more ports. Also all the water used for the locks and Lake Gatun is fresh water relying on the rain fall during the rainy season in the mountains of Panama.

The Panama Canal provides a short cut between the Atlantic and Pacific oceans for 6% of the world’s maritime commerce. The Panama Canal Authority (ACP), which allocates reservations, has slashed this number to 24. On December 1st it will go down to 22, and from February onwards only 18 ships will be able to cross each day. In late July, the state-owned ACP limited the number of vessels passing through the waterway each day to an average of 32, down from the usual 36. In previous droughts, weight restrictions were imposed because heavier boats risk running aground in the shallower water.

More upheaval for global shipping as Panama Canal cuts traffic due to drought

Table Of Content

• Shipping companies already dealing with attacks on vessels in Red Sea
• More than 100 container ships rerouted from Suez canal to avoid Houthi attacks
• Cruisers are getting younger as Gen Z and Millennials take to the seas
• US announces naval coalition to defend Red Sea shipping from Houthi attacks
• Teen pleads guilty to manslaughter over Uber driver's killing on Fraser Coast
• Firefighters fear lingering dry conditions could cause a 'major' bushfire, urge people to be cautious

He told French international news outlet France 24 that the El Niño climate pattern could worsen the situation further. The situation has become so dire that some shipping firms have paid millions of dollars to buy an earlier place in line. But any meaningful next steps will first need to contend with a standing law that prohibits the Panama Canal Authority from constructing reservoirs in watersheds beyond the one that feeds its existing lakes.

Panama Canal increases daily transits in January Profitability farmweeknow.com - FarmWeekNow.com

Panama Canal increases daily transits in January Profitability farmweeknow.com.

Posted: Fri, 05 Jan 2024 08:00:00 GMT [source]

Shipping companies already dealing with attacks on vessels in Red Sea

Water levels in the rainfall-fed lake have remained below normal despite the current "wet season". Container ships are the most common users of the Panama Canal and transport more than 40 per cent of consumer goods traded between north-east Asia and the US east coast. At the same time, last week S&P Global in its Commodities Insights report said it was hearing that coal shipments were being impacted. Some carriers they reported are splitting shipments across two vessels while others were exploring diverting to trips around Cape Horn. Ricaurte Vásquez Morales, the administrator of the canal, previously predicted the canal's income could fall by as much as $200 million next year because of the reduced traffic. For over a century, the Panama Canal has provided a convenient way for ships to move between the Pacific and Atlantic Oceans, helping to speed up international trade.

More than 100 container ships rerouted from Suez canal to avoid Houthi attacks

But added transit time is an issue for fresh fruit, particularly from countries such as Chile and Peru that ship to the eastern US and Europe through the canal. Cherry season in Chile will start to peak in January, and grapes, plums, nectarines and blueberries all could have a hard time reaching market, said Ignacio Caballero, director of marketing for Frutas de Chile, a trade group representing Chilean fruit growers. Princess Cruises operates numerous voyages through the Panama Canal, and the current water level crisis could disrupt their scheduled itineraries.

Expect delays if Transiting the Panama Canal this year - Sail World Cruising

Expect delays if Transiting the Panama Canal this year.

Posted: Tue, 17 Oct 2023 07:00:00 GMT [source]

Cruisers are getting younger as Gen Z and Millennials take to the seas

But a drought has left the canal without enough water, which is used to raise and lower ships, forcing officials to slash the number of vessels they allow through. That has created expensive headaches for shipping companies and raised difficult questions about water use in Panama. The passage of one ship is estimated to consume as much water as half a million Panamanians use in one day. There are also concerns about the impact of dry weather on the Rhine in Germany, one of Europe’s key shipping routes.

The Panama Canal’s low water levels–a consequence of a drying climate and El Niño–have forced the canal authorities to restrict daily ship transits, disrupting global sea trade and cruise itineraries, including this iconic crossing. Since July 2023, daily transits have been limited due to water shortages in the artificial lakes of Gatun and Alhajuela, reaching 22 vessels in November. From March 25, a total of 27 vessels have been able to pass daily through the waterway, which serves more than 180 maritime routes connecting 170 countries and reaching some 1,920 ports worldwide. The canal, used mainly by customers from the United States, China, and Japan, has a system of locks to raise and lower ships. For every ship that passes through, 200 million gallons of fresh water are released into the ocean. Oil and gas vessels, container ships hauling all manner of cargo, and grain carriers dominate traffic through the canal.

The problems at the Panama Canal, an engineering marvel that opened in 1914 and handles an estimated 5 percent of seaborne trade, is the latest example of how crucial parts of global supply chains can suddenly seize up. In 2021, one of the largest container ships ever built got stuck for days in the Suez Canal, choking off trade. And the huge demand for goods like surgical masks, home appliances and garden equipment during the pandemic strained supply chains to their breaking point. Things are looking up for the drought-stricken Panama Canal as new water levels allow an increase in the daily number of ships allowed through the man-made interoceanic corridor.

Firefighters fear lingering dry conditions could cause a 'major' bushfire, urge people to be cautious

Last week, the ACP announced it had temporarily changed its reservation rules to permit more ships without a booking to travel through the canal. Panama’s population has quadrupled since the 1950s, and more than half the country relies on the canal’s reservoirs — Gatún Lake and the smaller Alajuela — for clean drinking water. Having read the whole article, it seems the cost  rather that drought conditions has changes this particular itinerary on a Royal Caribbean ship. "Each time a ship goes through there, it uses up about 80 Olympic-sized swimming pools of water and that all comes out of the lake," maritime logistics expert from Deakin University Peter Van Duijn told ABC News.

The government agency has reduced maximum ship weights and daily ship crossings in a bid to conserve the canal's water. Only 31 ships will be allowed through the canal per day from November 1, down from circa 36 to 38 daily ship crossings during normal operations. The measures, which will remain in place until 21 August, limit the number of new reservations for vessels passing through the canal’s older locks, used by smaller ships, to make more room for those waiting without reservations. The restrictions led to a bottleneck of ships waiting for their turn to cross and sent companies scrambling to find alternative routes. Commercial ships are facing long queues and delays to travel through the Panama Canal as a lengthy drought in the Central American country has led to a cut in the number of vessels able to pass through one of the world’s most important trading routes.

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Reduced draft depths may necessitate modifications to Holland America Line’s fleet deployment strategy, impacting the availability of certain ships for Panama Canal crossings. Moreover, changes in transit schedules could affect planned shore excursions and port visits along the itinerary. Some of the largest containerships are being forced to offload boxes for transshipment by rail across the isthmus.

The US is a major exporter of grains — soybeans, corn, wheat — to Asia, much of it typically leaving the Gulf Coast and traveling through Panama. But low water levels on the Mississippi River have already prompted some American growers to put their grain on trains to the Pacific Northwest and ship it to Asia from there. Enrico Paglia, research manager at shipping services firm Banchero Costa, said overall US grain exports to Asia have fallen 26% this year compared to 2022, and grain flows through the canal have decreased 37% percent.

Aurora Expeditions is not the only cruise line affected by the Panama Canal’s low water levels. Several other prominent cruise operators rely heavily on the canal for their itineraries, offering passengers unforgettable experiences traversing this iconic waterway. Canal authorities attributed the drought to the El Niño weather phenomenon and climate change, and warned it was urgent for Panama to seek new water sources for both the canal's operations and human consumption. The same lakes that fill the canal also provide water for more than 50 per cent of the country of more than four million people. With shipping companies already dealing with disruptions in the Red Sea due to attacks on ships, word comes that another important trade route is being forced to curtail traffic. The Panama Canal Authority understands the implications but reports it is balancing the issues to keep the canal functioning while also ensuring a drinking water supply for 50 percent of the country’s population served by the same reservoir.

Nikolay Pargov, chief revenue officer for container shipping platform Transporeon, said container ship operators are already booking alternative routes to avoid the canal for 2024. The rigid routes of container ships – which for some shipping companies have thousands of customers to consider for each vessel – make it more difficult to re-route them at the last minute. Snell of British American said the clogged canal forced his company to stop shipping fresh-cut ferns from Seattle to Rotterdam’s flower markets. The business found work-arounds for other products from the US West Coast, hauling nuts and dried fruit from California to Houston or Norfolk, Virginia by rail, then transferring them to container ships bound for Europe.

Some companies had planned to reroute to the Red Sea — a key route between Asia and Europe — to avoid delays at the Panama Canal, analysts say. Panama Canal administrator Ricaurte Vasquez now estimates that dipping water levels could cost them between $500 million US and $700 million US in 2024, compared to previous estimates of $200 million US. Low water levels in the Panama Canal prompted capacity cuts earlier this year and carriers are still facing months of navigating restrictions. There's a backlog of vessels waiting to cross one of the world's crucial maritime passageways which saves ships from travelling thousands of kilometres. The owner of the Dali, the massive cargo ship that lost power and knocked down the Key Bridge on March 26, killing six men, has declared “general average,” according to Darrell Wilson, a spokesperson for the ship’s owner, Grace Ocean Private Ltd[1].

The canal typically handles an estimated 5 percent of seaborne trade, including 46 percent of the container traffic between the East Coast of the United States and Northeast Asia. But last summer, the Panama Canal Authority began taking the drastic measure of reducing traffic. Hapag-Lloyd AG, Mediterranean Shipping Co. and Maersk all have announced new Panama-related surcharges in recent months.