– Pratik Bijlani
The Panama Canal Authority plans to raise the number of vessels permitted to pass the canal from 22 to 34 per day by July 22, approaching its pre-drought capacity of 38 vessels. This decision comes as water levels in the canal rise, relieving some of the burden from a severe drought that had previously limited canal traffic.
The drought, which began last year and lasted through the typically dry season of December to mid-April, had a severe impact on Panama Canal operations. During the 2023-24 El Niño phase, Panama’s rainfall patterns were affected by the El Niño Southern Oscillation (ENSO), resulting in less precipitation. As a result, the canal operated at only 60% of its typical traffic capacity, allowing only 22 vessels to cross each day. The crisis threatens to disrupt global trade worth $270 billion per year.
During the drought, shippers encountered severe obstacles, including lengthy wait times that exceeded two weeks. Many others were forced to pay exorbitant prices to bypass the backlog, which added millions of dollars to shipping costs. The canal’s ability to precisely control water resources was critical in avoiding a worsening shipping problem.
Recent consistent rainfall has progressively raised water levels, allowing the Panama Canal Authority to cut vessel wait times to less than two days. This improvement has benefited worldwide shipping because the canal is a crucial crossing for international commerce routes.
The proposed increase to 34 vessels per day equals 90% of the canal’s full capacity and marks a significant step towards normalising operations. The canal’s ability to adapt and properly manage water supplies emphasises its importance in ensuring global commercial movement. As conditions improve, the Panama Canal Authority remains dedicated to increasing transit capacity and maintaining smooth passage for the numerous vessels that rely on this essential waterway.
Marex Media