Editorial / 17 Sep 2023

Panama pushes on

by Alexei Oduber, Managing Director of GAC Panama

Amid rumours that the Panama Canal has closed due to droughts as a result of unusual weather conditions, it is important to set the record straight: the Canal is fully operational and functioning seamlessly.

Since it was opened over a century ago, the Panama Canal has served as a strategically vital artificial waterway that connects the Atlantic and Pacific Oceans, enabling goods and vessels to move seamlessly. It has had a profound historic impact on international trade and commerce as hundreds of vessels pass through the locks every year. In 2022, 14,239 transits were made, transporting more than 173 million tonnes of goods.

Alexei no background

However, recent droughts in Panama have affected the Canal’s operation and raised concerns about the possible impact on world trade. The interoceanic waterway relies on local water reservoirs to fill its locks and levels have dropped, due to a delayed rainy season, resulting in increased waiting times for vessels looking to transit the waterway and major backlogs on both the Atlantic and Pacific sides.

Measures taken
Importantly, the Panama Canal Authority (ACP) has been fully prepared for such an eventuality. Since February, it has implemented a series of limited transit drafts, a practice it has employed many times in the past during the summer season and periods of restricted water levels. It has also restricted transits to 32 per day, down from an average of 36, to optimise water utilisation. More controls have been put in place related to booking availability and auction costs in a bid to control transit demand.

By implementing these procedures, the ACP has started to successfully alleviate the Canal’s backlog. The number of vessels waiting for transit has decreased from 167 on 8 August to 134 on 29 August. But, there is still work to be done.

Adobe Stock 126974095

Scenarios and projections
The rainy season has not yet fully started in Panama, despite this usually falling between April and May. As a result, water levels in the Gatun Lake are still significantly down and are not expected to improve until the end of October. This could present a significant challenge as the dry season typically starts in mid-December.

If lake levels do not reach optimum levels during this rainy season, this situation could continue well into 2024.

Given the unpredictable nature of rainfall in Panama, the measures put in place by the ACP are a part of its Water Projects Programme, which aims to provide a consistent local water supply, both for Panamanians and to ensure the Canal’s continuous operations. The programme covers a portfolio of projects with the US Army Corps of Engineers (USACE) that also consider sustainable development, climate scenarios and growth projections. This includes the use of 25,000 hectares on the west side of the waterway to address multiple aspects of its functionality and sustainability.

Crucially, they will ensure the Canal remains fit for purpose, optimising transit operations and ensuring the long-term viability of the waterway.

I Stock 909748718

Keeping well-informed and getting accurate, up-to-date information about canal operations is paramount. That is where your shipping agent comes in. By staying in touch with them, you can ensure that you can access the latest updates and insights to help you plan your transit and avoid additional costs and delays. GAC Panama helps provides regular updates posted in GAC's free daily Hot Port News bulletin.

Latest Insights