What is happening in the Panama Canal



What is happening and how will it affect the consumer in the coming months?

The Panama Canal

The Panama Canal is one of the epicenters of world maritime trade, covering 6% of global trade. The drought experienced by North America has led to a reduction in the daily traffic of commercial vessels.

The lakes that feed the canal are several meters below their usual state. Since last July 30, restrictions began to limit the daily transit of ships, in order not to continue reducing the draft.

Draft is the depth that the submerged part of a vessel reaches in the water, therefore, ships must reduce the volume of cargo they carry to cross the waterway.

Since January 3, the Panama Canal Authority warns of the risks of dry seasons

The lack of water in the place has caused the daily transit capacity of ships to be reduced, passing between 36 and 38 ships a day, to a maximum of 32.

The Panama Canal authority advises that depending on the level of Gatun Lake, weather forecasts and the combination of vessels, the restrictions may become increasingly tougher.

How is the limitation of daily ships affecting the market?

  1. Waiting times

    The waiting time for the delivery of goods is lengthening up to 21 days to cross to the other side of the strait. The average waiting time for unreserved transits is between 9 and 11 days. The long waiting time is causing 36% inflation on some products.

  1. Delay in the delivery of raw materials

    The delay is causing price hikes for three main reasons;

      -Greater shortages of goods
      -By increasing the waiting time, some vessels opt for auctions to get across in the shortest possible time, which entails a high increase in costs.

      -Austere policies of the Panama Canal due to the drought, derived from last January 3, 2023.

  1. The drop in revenue
  2. It is estimated that the channel will lose some 200 million dollars in revenue by the year 2024.

    Main routes affected in the Panama Canal

    • US East Coast - Asia
    • East Coast of USA - West Coast of South America
    • Europe - West Coast of South America

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