In the midst of the dry season in Panama, the effects on trade through the Panama Canal remain challenging in the coming months. Despite a wetter-than-expected November, the situation in the canal was not as severe as feared, allowing for an increase in daily transits in January.
The projections for the Panama Canal estimated 24 daily transits in January, surpassing previous expectations of 20 for January and 18 for February. Throughout fiscal year 2023, 12,638 vessels crossed the canal, with a daily average of 34 large vessels. In the first four months of fiscal year 2024, there were 3,233 transits of all types of vessels, the vast majority being Panamax type. However, the projected transit rate for fiscal year 2024 is 9,700, a 23% decrease from fiscal year 2023.
While container traffic receives much attention, tanker and dry cargo markets will be heavily affected. In the first four months of fiscal year 2024, chemical tankers accounted for 25.6% of Panamax-class vessels crossing the canal, while liquefied petroleum gas carriers represented 25.5% of Neopanamax traffic through the canal.
Water levels within the Panama Canal are largely responsible and hopes for a significant increase in water levels to boost performance are likely to meet harsh reality in the coming months. Water levels in Lake Gatun, the artificial lake that vessels must traverse, were at 81.2 feet as of Tuesday, the lowest level recorded since 1965. Projections indicate even lower levels in the next two months, falling below 80 feet in early April.
Three of the five largest ports in the United States depend on shipments passing through the Panama Canal: the Port of New York and New Jersey, the Port of Savannah, Georgia, and the Port of Houston. The water crisis is creating additional delays, with an average increase of six days in the scheduled transit time to the Port of Savannah from all ports worldwide.
In conclusion, the limiting effects of low water levels are generating additional delays at East Coast ports, significantly impacting scheduled transit times. Nature is beyond human control, and if water level projections are true, the coming months could worsen the ongoing crisis.
Source: Information based on FreightWaves report
