Drought forces the Panama Canal to raise some rates to maximums

The drought in Panama is affecting shipping through the canal, forcing authorities to restrict traffic and increase rates for some tankers to record highs.

The number of ships that can be booked to pass through the isthmus will decrease starting in November and will remain reduced until February, according to a navigation notice from the Panama Canal.

The cost of transporting fuel such as propane through the Panama Canal, a major global maritime trade route, has risen since dry weather began impacting shipping in July.

Rates for chartering very large gas carriers, or VLGCs, on the Houston-Japan route hit a record $250 per ton on Sept. 29, the highest since they were first published in 2016, the agency reported Tuesday. United States Energy Information Administration.

Under the new restrictions, the number of daily trips will drop from 32 to 25 at the beginning of November, then fall to 24 before the end of the month. In December, January and February, the number of daily ships should decrease to 22, 20 and 18, respectively.

In July, 36 ships a day passed through the canal.

Fewer slots since Friday

The canal will reduce reservation places for ships starting Friday due to the lack of rain, the most recent in a series of measures implemented in the midst of a severe drought that is estimated to last until next year.

In recent months, the route, through which around 5% of world trade transits, has imposed various restrictions on passage, including a reduction in the draft allowed to ships and a reduction in the maximum number of ships authorized to pass through per day from 36. under normal conditions.

“Despite all the measures taken, the level of Gatun Lake has continued to drop to unprecedented levels for this time of year.“said the Panama Canal Authority (ACP) in a statement sent Monday night to its clients.

“Based on rainfall projections for the coming weeks, which today are expected to be 38% less for the rest of the year, the ACP considers it necessary to further reduce daily traffic capacity to postpone the need for additional reductions. draft”he added.

From November 3 to 6, the number of reserve places for ships will be reduced to 25, and from the 7th to the 30th of the same month it will drop to 24. Additionally, from December 1 to 31 the number of reserve places will be reduced to 22, and from January 1 to 31 of next year it will drop to 20.

The ACP also explained that from February 1, 2024 and until “new notification” the number of reservation spaces will be reduced to 18 per day.

Experts have warned of possible disruption to maritime trade ahead of what is shaping up to be an even drier period next year. They argue that a possible early start to the dry season in Panama and above-average temperatures could increase evaporation and lead to near-record water levels in April.

In the past, restrictions have led to long lines of waiting vessels. The effects have led the channel to estimate a reduction in income for 2024, of up to US$ 200 million less.

With information from Bloomberg and Reuters