In response to a persistent drought worsened by a severe El Niño weather pattern, the Panama Canal Authority is taking steps to conserve water. The authority will gradually reduce the number of daily ship transits from 29 to 25 initially, and in the coming weeks, further cuts will reduce it to 18 ships daily by February.
This represents a significant reduction, ranging from 40% to 50% of the canal\’s usual capacity. Under typical conditions, the canal sees 34-36 daily transits.
This situation is having a substantial impact on global trade flows, especially for the U.S. East Coast. Shipping containers passing through the Panama Canal to the East Coast are experiencing delays, with the Port of Charleston facing the lengthiest setbacks.
The Panama Canal is a preferred route for East Coast trade due to its quicker transit times. While shipping cargo from Shenzhen, China, to Miami, Florida, via the Suez Canal takes 41 days, the Panama Canal shortens the journey to just 35 days.
With a reduced schedule and an average of 26 daily arrivals of commercial ships on the Pacific side of the canal and eight on the Atlantic side, the likelihood of cargo waiting idly is on the rise, warns Captain Adil Ashiq, who heads North America for MarineTraffic.
According to MarineTraffic data, wait times on the Atlantic side have increased by an average of 30% compared to the previous week (from 0.4 days to 0.6 days), and on the Pacific side, wait times have extended to 2.2 days.
These delays are prompting shippers sending goods to both U.S. East Coast and West Coast ports to seek alternative plans, according to Alan Baer, the CEO of OL USA. The situation is causing disruptions in global trade, especially for those relying on the efficient passage through the Panama Canal.
