Business & Economy

Panama Canal jam due to drought impacts intl. trade

Panama City, Aug 22 (EFE).- About 130 ships, more than the Panama Canal normally handles, wait to cross it, many of them bulk carriers and gas carriers that could not make a reservation.

It is a congestion derived from the lack of water due to the severe drought this year that impacts international trade.

As of Tuesday afternoon, there were 128 ships in line to cross, 54 with reservations and 74 without, the Panama Canal reported in a press release, in which it said that “under normal circumstances, up to 90 ships are waiting to transit.”

This is less than the 134 ships waiting Monday, the canal told EFE in a written response, adding that “for this month, the average waiting time for unreserved transits is between nine and 11 days.”

The Panama Canal Administration said there is high demand for its services despite measures taken due to the drought, which “demonstrates the confidence (of) the world shipping community” and shows the role it plays in world trade.

It comes after the number of ships that can transit through the Canal each day was limited to 32, out of a maximum of 38, a measure imposed since July 30 due to the lack of water, the canal’s head Ricaurte Vasquez said.

This move followed a stepwise reduction in draft, or the depth in the water that the submerged part of a vessel reaches, now 44 feet from a maximum of 50.

It implies that ships must pass through with less cargo, which impacts the income from tolls from the Panama Canal, a relevant world trade route that moves between 500 and 510 million tons of cargo each year, according to data from its administration.

The main routes served by the Panama Canal are the East Coast of the United States-Asia; East Coast of the US-West Coast of South America, and Europe-West Coast of South America, all impacted by the jam.

All types of cargo pass through the Canal, from container ships, the star segment of the business, to refrigerated ships with fruit, passing through bulk carriers, gas carriers and vehicle carriers, Jorge Quijano, the canal’s administrator between 2012 and 2019, told EFE. .

Those now crowded both at the entrance of the Pacific and Atlantic Oceans are mostly bulk carriers that transport coal or iron ore, and some gas carriers, among others, that could not book transit. They are ships that do not follow fixed routes and have to transport cargo at short notice.

Some of these vessels, which can accumulate up to 14 days of waiting according to industry sources, are opting for auctions in order to get a reservation, which raises their costs.

“They have been paying up to $700,000 to be able to get that auction, to which we must add the cost of the toll and others,” the former head said.

Some oil-carrying ships are opting for other routes, such as the Suez Canal or around the Cape of Good Hope, according to analyst reports. EFE


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