The historic drought is further constricting the flow of global trade along Panama Canal

 

The Panama Canal, the artery through which approximately 5% of global maritime trade flows, is preparing for a further reduction in vessel traffic that could deepen the crisis in the logistics sector.

The Panama Canal Authority (ACP) announced on Monday that it plans to limit passage to an average of 29.5 transits per day during the upcoming fiscal year, which begins in October. 

This marks the second reduction of the year, following the one that took effect on September 4, when the maximum number of vessels per day was lowered from 36 to 32.

The cause is the same issue that has plagued the interoceanic waterway in recent years: a lack of rainfall. The canal relies on fresh water stored in the artificial lakes of Gatun and Alhajuela to operate its locks, and water levels have dropped due to an El Niño phenomenon shaping up to be the most intense on record, so severe that a national emergency has been declared.

 The impact of the measure remains to be seen. According to the local press, the projected reduction will result in approximately 621 fewer transits next year compared to the same period this year. Meanwhile, agencies estimate that the figure could exceed 700 vessels, which will hit the physical volume of trade passing through the waterway.

A crucial portion of global trade moves through this route, whose primary users are the United States and China. Furthermore, the announcement comes at a time when Panama is still determining the future of the Balboa and Cristóbal ports following the termination of the contract with Panama Ports Company, and is evaluating new port concessions.