Panama Canal Pileup due to Drought Conditions

Panama officials enacted water conservation measures in July 2023 in efforts to combat the drought conditions causing major pileup in the Panama Canal global shipping route. Water levels are low, so Panama Canal Authority has reduced the number of ships allowed to pre-book transit through the Panamax locks, and restrictions due to ongoing drought conditions will remain in effect until August 21. Not only are the number of ships reduced, but vessel weight limits are require to safely pass through. Shippers now need to use multiple vessels to move their product. Recently an Evermax vessel was too heavy and was forced to unload 1400 containers at the port of Balboa. The PCA has temporarily lowered the availability of booking slots from August 8-August 21 for Panamax vessels, which are the largest vessels that can cross the canal. These vessels can carry 4,500 twenty-foot equivalent units (TEUs), which are the dimensions of a container. The number of pre-booking slots was reduced to 14 daily from 23.(Source: CNBC)

“We informed our customers that effective August 8, a new Booking Condition, namely Condition 3, came into effect for the utilisation of the Panamax locks. The standard offering of reservations comprises 23 booking slots for these locks. Under Condition 2, in scenarios involving a substantial reduction in capacity (such as lane closures for maintenance), the allocation is reduced to 16 booking slots. Meanwhile, under Condition 3, as currently being implemented, the booking slots are limited to 14 in total (comprising 10 slots for super-sized vessels and 4 slots for regular-sized vessels). To this day, reservations for the Neopanamax locks remain unaffected.”
“This adjustment, effective until August 21, 2023, has been introduced to alleviate congestion for ships already in queue to transit or in route, who were unable to secure reservations beforehand,” said the Panama Canal Authority (ACP) in a statement. (source: Sea Trade Maritime News)

40% of all U.S. container traffic travels through the Panama Canal every year. This will increase shipping cost and time. The congestions is ongoing will drought conditions improve. Despite current limitations and measures taken, demand remains high, hence the increased waiting times.

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