Panama Canal reduces ship traffic due to drought, as El Nino bites

The Panama Canal, a crucial maritime route connecting the Atlantic and Pacific oceans, is facing a significant reduction in daily ship traffic due to an ongoing drought. The canal's operator has announced a gradual decrease in the number of daily crossings. From Friday, the number of ships allowed to cross will be reduced from 29 to 25, and by February, it will further decrease to 18 ships a day, according to the Panama Canal Authority.

The Panama Canal is a vital artery for global maritime trade, with approximately six per cent of all sea trade passing through it. In 2022, the canal accommodated an average of 39 ships per day. However, this number has been steadily declining for months due to water shortages. The current month of October is the driest in the past 73 years. The El Nino weather phenomenon, known for causing droughts, continues to affect the canal's reservoir system, leading to a decrease in water availability.

The 80km (50 miles) long Panama Canal, operational for over a century, provides a direct route between the Atlantic and Pacific oceans, bypassing the South American continent. Each ship crossing the canal requires 200 million litres of freshwater to navigate through the canal's lock system, which functions like water elevators. This system is supported by two artificial lakes replenished by rainfall. These lakes also supply drinking water to half of Panama's population. However, the country is grappling with a severe drought, which has necessitated restrictions on the size of ships that can traverse the canal. The El Nino weather phenomenon is exacerbating the situation. These restrictions have led to significant traffic delays, with a record queue of 163 ships in August. The canal operator anticipates these limitations will result in a US$200 million decrease in earnings in 2024.