Panama Canal Slashes Number of Ships, Citing Low Water From Drought

Table Of Content

• Exclusive: Cruise lines cut ships to Australia despite demand boom
• ASX defies US tech slump to jump in early trade
• Former HGTV star slapped with $10 million fine and jail time for real estate fraud
• More upheaval for global shipping as Panama Canal cuts traffic due to drought
• At least 5 companies under Elon Musk’s control billed each other around $9 million in expenses
• Shipping companies already dealing with attacks on vessels in Red Sea

These adjustments could have significant ramifications for the cruise industry and the communities reliant on tourism revenue from canal-related activities. Efforts to address the water level drop-off include pumping seawater or redirecting rivers into Gatun Lake. However, these measures are complex and have potential implications for Panama’s drinking water supply, as Gatun Lake is the region’s primary source of freshwater. The combination is having far-reaching effects on global trade by delaying shipments and raising transport costs.

Exclusive: Cruise lines cut ships to Australia despite demand boom

The incident has cost Baltimore the loss of a key bridge and massive disruption to the US supply chain. For the cargo on board, the cargo owners face the prospect of massive additional costs as a consequence of the declaration... Weather conditions worsened by the arrival of the El Niño phenomenon also forced the ACP to reduce the draft (the submerged part of the ship) from a maximum of 50 feet to 44 feet.

ASX defies US tech slump to jump in early trade

As of March 18, 2024, the water level of Gatun Lake sat at 80.5 feet (24.5 meters), over 7 feet (2.1 meters) below its maximum operating level of 88 feet (26.8 meters). Consequently, the canal’s operational capacity has been significantly affected, with container vessels restricted to draft depths of 44 feet (13.4 meters) instead of the usual 50 feet (15.2 meters), resulting in reduced water consumption in the locks. They pay an extra fee for this service and the cruise lines pay a further fee for being guaranteed a daytime transit. Water levels would need to be extremely low for the Canal to refuse these additional revenues. Ships anchored waiting for a Canal transit is a daily occurence, but those ships turn up on spec, register and wait their turn.

Former HGTV star slapped with $10 million fine and jail time for real estate fraud

Unlike the Suez Canal, which relies on seawater, the Panama Canal uses freshwater from an artificial lake to supply its waterway. But after an unusually dry year, the watershed of rivers and brooks that usually feed into the lake has been particularly meager, leaving Lake Gatun with about 80 feet of water. However, analysts at Project44, a supply chain platform, previously told Insider the upcoming holiday season could add further strain on the popular shipping route.

Delays, Cancellations and Costs Mount as Panama Canal Reduces Transits

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.

As part of the limit on the number of daily transits, the Panama Canal Authority set the maximum at 10 daily transits for the larger Neopanamax locks. The canal authority has been encouraging shipping companies to book their slots to minimize delays, but this is a costly process for the shipowners adding to the expense in addition to the transit fees. However, according to the ship agency Waterfront Maritime Services, it appears some ships are taking the advice. However, another 83 ships, up by three, are also expected to arrive at the canal without bookings. Panama Canal Administrator Ricaurte Vásquez Morales has detailed the challenges they are facing due to the drought and after repeatedly lowering the draft limits, he announced the Panama Canal would maintain a draft of 44 feet in the coming months.

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

The cuts announced Wednesday by authorities in Panama are set to deal an even greater economic blow than previously expected. "We have to find other solutions to remain a relevant route for international trade. If we don't adapt, we are going to die," Vásquez told France24. Because of this, the canal authority has had to ration the transit through the Panama Canal locks, per the AP. Analysts are fearful that a repeat of 2022, when some larger vessels were forced to reduce their loads in order to continue using the river, could hit growth in Europe’s largest economy.

At least 5 companies under Elon Musk’s control billed each other around $9 million in expenses

This historic low has forced the Panama Canal Authority to reduce daily traffic from 36 to 24 vessels and limit allowable draft sizes, impacting energy product carriers, container vessels, and other ships. Concern is growing across the shipping industry as well as the potentially broader impact following the recent decision by the Panama Canal Authority to reduce the daily number of transits to conserve water. PANAMA CITY (AP) — A severe drought that began last year has forced authorities to slash ship crossings by 36% in the Panama Canal, one of the world’s most important trade routes. The Panama Canal Authority has reduced daily traffic through the narrow corridor by nearly 40 percent compared with last year. Many ships have already diverted to longer ocean routes, which increases both costs and carbon emissions, while the global shipping company Maersk recently announced they will shift some of their cargo to rail. Holland America Line‘s Panama Canal cruises are renowned for their immersive experiences, but the low water levels present logistical challenges for the cruise line.

The artificial waterway, which spans 82 kilometres, features a series of locks that raise and lower vessels to match the water level of Gatun Lake, the canal’s primary water source. 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% of the country of more than 4 million people. A severe drought that began last year has forced authorities to slash ship crossings in the Panama Canal by 36 per cent. STRI's Steven Paton said a potential early start to Panama's dry season and hotter-than-average temperatures, typical of major El Niño events, could increase evaporation from Gatun Lake and result in near-record low water levels by March or April 2024.

Norwegian Cruise Line offers diverse Panama Canal itineraries, but the current water level crisis poses operational uncertainties. The need to adhere to draft restrictions may compel Norwegian Cruise Line to adjust sailing schedules or consider alternative routes to ensure the safety and comfort of passengers. These changes could impact the cruise experience, including onboard entertainment, dining options, and shore excursion availability. Moreover, according to a report by The Peterson Institute for International Economics, projected water levels at Gatun Lake for 2024 are the lowest in the last five years, with March and April levels expected to be only 80 feet and 79 feet, respectively.

With climate change bringing a new normal to our planet ,drought in the  tropics is an also a contributing factor to  cruising in the future. While our boarding didn’t take 7 hours, I can tell you it was extremely disorganized and slow even with only 300 passengers. Similarly, in the early 2010s, the canal faced concerns over water scarcity, prompting water-saving measures and operational adjustments to mitigate the effects of diminishing water reserves. These experiences underscore the canal’s vulnerability to environmental factors and highlight its ongoing efforts to manage its water resources sustainably. The new cuts announced Wednesday by authorities in Panama are set to deal an even greater economic blow than previously expected.

Panama Canal drought cancels cruise: What you need to know - Latest Cruise News & Updates Cruise Passenger

Panama Canal drought cancels cruise: What you need to know.

Posted: Thu, 21 Mar 2024 07:00:00 GMT [source]

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.

"We are currently seeing an increase in arrivals," the canal's deputy administrator Ilya Espino said on Thursday. Rainfall is about 30 to 50 per cent below normal and the area around the canal is experiencing one of the two driest years in the country's 143 years of keeping records, according to data from the Smithsonian Tropical Research Institute (STRI). It connects the Atlantic and Pacific Oceans and its construction significantly reduced the journey for ships travelling between the oceans. The Court of Appeal decision in Smit Salvage BV & Ors v Luster Maritime SA & Anr (The ‘Ever Given’) highlights the challenges of negotiating contracts in rapidly changing environments, particularly in cases involving maritime casualties.

“It’s getting more costly, and looking for alternative routes will increase costs and maybe also weigh on prices in the end,” she said. According to Avance Gas Holding Ltd., about 50 very large gas carriers are now on return voyages to the US via the Suez Canal or the Cape of Good Hope, up from 10 vessels in July. Many companies, particularly those moving fuels from the US Gulf Coast to Asia, have been willing to pay extra to ensure their ships get through.