Earlier this week we reported on how Panama Canal officials have limited how many ships are able to pass through, and as a result the trucking industry will face major slowdowns.
These restrictions, according to the Panama Canal Authority, are a direct response to the low water levels in the canal caused by the drought.
“Our supply chain is very delicately balanced,” said Danny Ramon, intelligence and response manager at Overhaul. “If one thing goes out of whack a little bit, it can throw the whole system into chaos. We saw that with the Ever Given in the Suez Canal a couple of years ago. That’s basically the same thing that’s going to be going on here.”
Panama Canal Administrator Ricaurte Vásquez Morales said Sept. 12 that unusually high ocean temperatures, an unpredictable rainy season and the persistence of the El Niño weather phenomenon has resulted in a continuous restriction of vessel traffic into 2024.
This means that during Christmas and Chinese New Year, when the canal is the busiest, there will be a significant increase in wait times for truck drivers awaiting loads.
The number of ships moving through the canal has decreased from 36 to 32 due to the low water reservoir. This decline in four ships has resulted in a backlog of ships who are in a bidding battle for open slots.
“This is not the most severe drought Panama has faced, but given the operation of the canal, this is the most severe drought that we are facing even with the level of operations we currently have,” Vásquez Morales said during the virtual press briefing.
Alexei Oduber, managing director at GAC Panama, said in an interview that the number of times a slot is auctioned off depends.
Slots are often awarded at the minimum bid, which can be as low as $110,000, he said.
Ports including Mexico’s Lazaro Cardenas and Buenaventura in Colombia have expanded activity for containers seeking alternatives, Oduber said.
“There are several options and many ways to get through,” he said.
