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A shipment waits near the Centennial Bridge to transit through the Panama Canal locks in Panama City.
PANAMA CITY >> A severe drought that began last year forced the government to cut off shipping through the Panama Canal, one of the world’s most important industrial routes, by 36 percent.
The new cuts announced today by authorities in Panama are set to deal an even greater economic blow than previously expected.
Canal administrators now estimate that dipping water levels could cost them between $500 million and $700 million in 2024, compared to previous estimates of $200 million.
One of the most severe droughts ever hit by the Central American country has wreaked havoc on the 50-mile shipping lane, causing a jam of vessels, casting doubt on the canal’s reliability for foreign shipping and raising concerns about its impact on global trade.
Today, Panama Canal Administrator Ricaurte Vasquez announced that he will reduce the number of crossings to 24, after having gradually reduced crossings last year, from 38 per day in general hours.
“It’s vital that the country sends a message that we’re going to take this on and find a solution to this water problem,” Vásquez said.
Vásquez added that in the first quarter of the fiscal year, passengers registered 20% fewer shipments and 791 fewer vessels than at the same time last year.
It was a “significant reduction” for the country, Vásquez said. But the official said that more “efficient” water management and a jump in rainfall in November has at least enabled them to ensure that water levels are high enough for 24 ships to pass daily until the end of April, the start of the next rainy season.
The Canal government attributed the drought to the El Niño phenomenon and climate change, and warned that Panama urgently needs to seek new water resources, either for the operation of the canal or for human consumption. The same lakes that fill the canal also supply water to more than 50% of the country of more than four million people.
“The water problem is a national problem, not just of the Canal,” Vásquez said. “We have to address this issue across the entire country.”
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