Global warming is affecting shipping through the Panama Canal, delaying US imports of everything from new cars to fuel.
Every ship traversing the
canal between the Atlantic and Pacific oceans requires 50 million gallons of
fresh water, drawn from two man-made lakes in the middle of the isthmus. But reduced rainfall there this year has made
water levels in the lakes drop precipitously, meaning less water to feed the
canal, let alone provide fresh water to the locals.
That’s led to a 200-ship wait on both sides of the canal, delaying passage of goods. And the ships that are being allowed through, some booked a year in advance, can carry less cargo because their draught (how deep the ships ride in the water) has been reduced from 50 feet depth to just 44 feet. That reduces the through-put as each ship can each carry less cargo.
vessels (140 feet long and 180 feet wide) usually draw 60 feet in depth, so
their cargos also have been reduced. As
a result, some of these mega-ships that carry liquified propane or butane (or
up to 13,000 shipping containers) are having to divert all the way around South
America or circumnavigating the globe the long way via the Suez canal, adding
to fuel prices in the US.
Even smaller ships are facing
delays as traffic in the canal is now limited to 32 crossings per day from the
usual 36. To monetize the supply-demand
imbalance some shippers are bidding on auctions to prioritize their vessels. While a usual Panama crossing might cost
shippers $400,000 per trip, a few shippers are paying as much as $600,000.
All of which means more
expensive prices for imports in the US where 73%
of the cargo (worth $270 billion annually) is headed, including to ports
like Port Elizabeth in NYC’s harbor.
One beneficiary of these
delays may be the Trans-Panama
Railway (which pre-dates the canal and is now co-owned by the Canadian
Pacific – Kansas City RR). Ships that
can’t wait for the canal can offload their cargo on one side of the isthmus,
put it on trains that make the 47-mile journey and load it on another ship on
the other side to complete its journey. If
improved, the railway could carry up to 1.4
million containers annually.
To alleviate the canal’s water
problems the Panamanians have hired the US Army Corps of Engineers (builders of
the original canal) for a $10 billion contract to divert water from inland
rivers into the man-made lakes feeding the canal’s operations. But this will be a ten-year project.
So after a COVID-era nightmare
of shipping delays at US ports like Long Beach CA (which led to many carriers using
the Panama Canal to go directly to east-coast US ports), import delays will
persist. But this time it’s not due to
high US demand for imports but global warming’s effect on rainfall in the
jungles of Panama.