Panama Canal Traffic Drop Could Cost More Than $500 Million
Panama canal traffic drop could cost more than $500 million, as number of ships waiting for Panama transit reduces. Last year's onset of a severe drought has compelled authorities to reduce ship crossings through the Panama Canal by 36%, a critical global trade route.
Author:Elisa MuellerReviewer:Camilo WoodJan 19, 202419.5K Shares278.5K Views
Panama canal traffic drop could cost more than $500 million, as number of ships waiting for Panama transit reduces. Last year's onset of a severe drought has compelled authorities to reduce ship crossings through the Panama Canal by 36%, a critical global trade route. The latest reductions, revealed by Panamanian authorities on Wednesday, are anticipated to inflict a more significant economic impact than initially projected.
Administrators of the canal now predict that the decreased water levels may result in losses ranging from $500 million to $700 million in 2024, a stark increase from the earlier estimate of $200 million.
The Central American nation is grappling with one of the most severe droughts in its history, leading to disorder along the 50-mile maritime route. This has resulted in congestion of boats, calling into question the reliability of the Panama Canal for international shipping and sparking concerns about its impact on global trade.
Panama Canal Administrator Ricaurte Vásquez announced on Wednesday that daily ship crossings would be reduced to 24, following gradual cuts implemented last year from the normal rate of 38 crossings per day.
“„It's vital that the country sends a message that were going to take this on and find a solution to this water problem.- Ricaurte Vásquez
Vásquez noted that in the first quarter of the fiscal year, the canal experienced a 20% reduction in cargo and 791 fewer ships compared to the previous year.
This decline was deemed a "significant reduction" for the country, according to Vásquez. However, he mentioned that through more "efficient" water management and a surge in rainfall in November, they have maintained adequate water levels, allowing 24 ships to pass daily until the end of April, marking the commencement of the next rainy season.
The authorities of the canal attributed the drought to the El Niño weather phenomenon and climate change. They emphasized the urgency for Panama to explore new water sources for canal operations and human consumption. The lakes supplying the canal also serve as a water source for over 50% of the country's population, which exceeds 4 million people.
“„The water problem is a national problem, not just of the Canal. We have to address this issue across the entire country.- Ricaurte Vásquez
Conclusion
Due to an ongoing and severe drought, the ACP (Panama Canal Authority) has reduced the maximum draft on its larger locks and significantly decreased daily transit numbers by over 40%. This has led to a notable decline in traffic, prompting many ships to choose longer routes, either circumventing the capes or opting for the Suez Canal. However, the Suez Canal has faced its own challenges in recent months, with the Houthis in Yemen targeting commercial sea traffic in the southern Red Sea.
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Elisa Mueller
Author
Elisa Mueller, a Kansas City native, grew up surrounded by the wonders of books and movies, inspired by her parents' passion for education and film.
She earned bachelor's degrees in English and Journalism from the University of Kansas before moving to New York City, where she spent a decade at Entertainment Weekly, visiting film sets worldwide.
With over 8 years in the entertainment industry, Elisa is a seasoned journalist and media analyst, holding a degree in Journalism from NYU. Her insightful critiques have been featured in prestigious publications, cementing her reputation for accuracy and depth.
Outside of work, she enjoys attending film festivals, painting, writing fiction, and studying numerology.
Camilo Wood
Reviewer
Camilo Wood has over two decades of experience as a writer and journalist, specializing in finance and economics. With a degree in Economics and a background in financial research and analysis, Camilo brings a wealth of knowledge and expertise to his writing.
Throughout his career, Camilo has contributed to numerous publications, covering a wide range of topics such as global economic trends, investment strategies, and market analysis. His articles are recognized for their insightful analysis and clear explanations, making complex financial concepts accessible to readers.
Camilo's experience includes working in roles related to financial reporting, analysis, and commentary, allowing him to provide readers with accurate and trustworthy information. His dedication to journalistic integrity and commitment to delivering high-quality content make him a trusted voice in the fields of finance and journalism.
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