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Wait 20 days! 150 ships "immobile"! Panama Canal meets worst water in history!
Aug 15,2023
The Panama Canal, the main artery of global shipping, is suffering from drought and dry water unprecedented since records began in 1950.
This has not only led to a significant decline in the capacity of the Panama Canal, but also led to more and more serious delays for container ships passing through the Panama Canal!
In the first week of August, the average delay time for each ship in the Panama Canal is already as high as 15 to 19 days!
Backlog of 150 ships
The Panama Canal is suffering from drought and water losses unprecedented since records began in 1950, resulting in a significant decline in the canal's capacity.
In response, the Panama Canal Authority (PCA) adopted water-saving measures in late July, temporarily reducing the reservation of Panamanian ships from August 8 to August 21, and the reservation period was reduced from 23 to 14 per day, resulting in the ship blocking accident.
It is understood that at present, the panamax type lock has a backlog of 129 ships and the neopanamax type lock has a backlog of 21 ships, causing delays of 17 and 20 days for ships from the Pacific to the Atlantic region, respectively, and the waiting time for ships sailing back is 16 and 19 days respectively.
In July, the PCA imposed an additional stricter lower water limit, requiring ships to reduce their deadweight by 40 per cent, which had an impact on those in transit.
It is reported that a large container ship named Ever Max under EVA Shipping had to reduce its load by 1400 containers before it could pass through the canal.
The unloaded containers will be transported by rail to Cologne and reloaded there, and then shipped to Savannah. It is foreseeable that the additional costs incurred will not be low.
Changes in operating conditions have caused ships on all segments to face delays. Ship tracking data shows that there are long queues of ships waiting to pass on both sides of the Panama Canal!
"The delays in the Panama Canal are a reminder of the urgent need to address climate change. Shipping is one of the most vulnerable to the effects of climate change and we need to act to reduce emissions and mitigate risks." Thomas Zaidman, managing director of dry bulk shipowners and operator Sagitta Marine, commented.
While rains have resumed in Panama, authorities are unlikely to make any upward revisions to draft or transit numbers anytime soon, as this year's El Nino weather phenomenon brings drier weather later in the year.
In fact, the Canal Authority has acknowledged that it could lose as much as $0.2 billion in revenue next year if the situation continues.
Congestion Affects Container Transportation Market
The severe drought forced the Panama Canal to introduce shipping restrictions, which not only meant that container ships wishing to pass through the Panama Canal had to lighten their loads and pay higher fees.
It is also expected that the cost of transporting goods through the Panama Canal will rise further this summer, and the goods may also face delays.
According to Nathan Strang, the canal draft restriction will significantly reduce the available space on most shipping company container ships, which means that more ships will be required to transport the same amount of cargo, which may increase the queue time for ships waiting to pass.
Strang said some shippers will have to split heavier cargo into two containers instead of one, and ships carrying heavier cargo will be more affected.
The measures could cost importers and retailers an additional $1500 per container through the Panama Canal.
A report said that due to the limited number of ships crossing the border each day, the canal authority recommended that shipowners apply for the time period to pass through the canal in advance, which means that they will soon have to participate in the "auction" of transit time, and these auctions have been more than $350000.
In addition, some shipping companies began to impose a Panama Canal surcharge.
Dafei announced that from June 1 and September 1 respectively, the Panama Canal surcharge PCC will be continuously increased, with an increase of US $300/box each time.
In May, Hapg-Lloth issued a notice stating that severe draft restrictions had been imposed on ships passing through the Panama Canal due to lower-than-normal water levels in Gatong Lake.
Therefore, from June 1, 2023, the Panama Canal surcharge PCC will be imposed on all goods transported from East Asia to North America, at US $500 per box.
The severe drought forced the Panama Canal to introduce shipping restrictions, which not only meant that container ships wishing to pass through the Panama Canal had to lighten their loads and pay higher fees.
It is also expected that the cost of transporting goods through the Panama Canal will rise further this summer, and the goods may also face delays.
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