A severe drought that began last year has forced authorities to slash ship crossings by 36 percent in the Panama Canal, one of the world’s most important trade routes.
The new cuts announced on Wednesday by Panamanian authorities are set to deal an even greater economic blow than previously expected and raise concerns about its affect on global trade.
Canal administrators now estimate that dipping water levels could cost them US$500 million to US$700 million this year, compared with previous estimates of US$200 million.
Photo: AP
On Wednesday, Panama Canal administrator Ricaurte Vasquez said daily ship crossings would be cut to 24 a day, compared with 38 in normal times last year.
Vasquez added that in the first quarter of the fiscal year the passageway saw 20 percent less cargo and 791 fewer ships than the same period the year before.
It was a “significant reduction” for the country, Vasquez said, but he added that more “efficient” water management and a jump in rainfall in November last year 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.
Meanwhile, weather-related disruptions at ports in northern Europe and the diversion of vessels away from the Red Sea are causing “increased yard density” at container terminals, A.P. Moller-Maersk A/S said in an update to customers yesterday.
“Customers are kindly asked to pick up their units as soon as possible after discharge to support fluidity,” the company said.
Maersk and other shipping groups have diverted vessels away from the Red Sea and the Gulf of Aden following attacks by Yemen’s Houthis, sending them around the Cape of Good Hope rather than through the Suez Canal shortcut.
Additional reporting by Reuters
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