Panama Canal draft cut revives memories of drought crisis

The Panama Canal Authority (ACP) has announced a reduction in the maximum authorised draft for vessels transiting its neopanamax locks, a move likely to rekindle concerns across global shipping about a repeat of the severe disruption experienced during the canal’s last drought crisis.

Effective July 3, vessels using the neopanamax locks will be limited to a maximum draft of 49.5 ft (15.09 m), with the ACP citing current and projected water levels in Gatun Lake as well as the potential development of an El Niño weather pattern later this year.

The measure forms part of the canal’s broader water management strategy and marks the return of draft restrictions for the first time in around two years. Canal authorities stressed that the adjustment is precautionary and will not affect the number of daily vessel transits.

The announcement nevertheless serves as a reminder of the 2023-24 drought, when water shortages forced transit restrictions and vessel draft limitations that cut canal throughput by as much as 40% below normal levels at the height of the crisis.

Canal officials sought to reassure customers during a recent industry briefing, noting that unusually heavy rainfall during the latest dry season has left both Gatun and Alhajuela lakes at maximum capacity.

According to the ACP, current water reserves provide a substantial buffer should El Niño develop during the second half of this year, and the authority does not expect significant disruption before December. Weather conditions and hydrological forecasts are continuing to be monitored on a weekly basis.

Analysts at Clarksons Research said that Panama is already operating under increasing pressure from record US energy exports. Product tanker transits reached record levels in April and May, while growing volumes of liquefied petroleum gas and ethane exports have intensified competition for available slots.

Any future restrictions could therefore have a larger impact than during previous cycles.

“As trade flows are reshaped by the Middle East conflict, trends at Panama are again in close focus,” Clarksons said in its latest weekly report.

Signs of congestion are already visible. Clarksons estimates that deepsea cargo vessel waiting times averaged 50 hours during April and May, up from around 30 hours before the recent surge in traffic. The number of vessels waiting to transit has also climbed sharply.

Competition for priority passage is becoming increasingly intense. Clarksons reports that average auction prices for canal transit slots have trebled to around $400,000. Splash reported last month that some priority bookings had changed hands for as much as $4m per vessel, surpassing prices recorded during the previous drought emergency.

Source: Splash 247

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