Panama water shortage impacting international trade

MikeInOr · Aug 30, 2023

When I saw this story on the news it took me back a couple of years ago when COVID was causing shipping and supply chain problems that affected most everyone.

Basically the reservoir that supplies water for the Panama canal (Gatun Lake) is low due to a drought which is causing a shortage of water to operate the Panama canal. It sounds like it is going to get worse before it gets better. One article I saw said that shippers are paying $400K extra (on top of the normal $400K canal charge) to put their cargo ships at the front of the line. Sounds like the cost of anything being shipped is going to go up.

Panama Canal's low water levels could become headache for consumers

A longer dry season and a less rainy wet season have led to a shortage of freshwater to feed the Panama Canal.

abcnews.go.com

40% of all U.S. container traffic travels through the Panama Canal every year,

gmerkt · Aug 30, 2023

Some containers from east Asia that now go through the Canal to the east coast may get diverted to west coast ports, then shipped east by rail. Exports, like ag. products in bulk, may also get diverted to west coast ports. Imports from Europe can be landed in east coast ports and transshipped by rail if they need to go west. Of course adding in rail shipment also drives up cost. But lack of sufficient water to run the Canal properly is a problem, problems are to be solved, usually with applications of more money as you point out. I'm not crying for the Panamanians, they wanted the Canal, they've got it. What they will want is no diminution of their revenues from running the Canal, and of course this sets the stage for increasing transit fees up to what they'd get if there were no water shortage.

Provincial · Aug 30, 2023

My guess is that more ships are transiting the canal that it was designed for. It takes a given amount of water to run a ship through the locks. The more ships, the more water used.

Unless there has been a dramatic decrease in rainfall in the watershed, increased traffic will be the major factor.

Increasing the "watershed" by collecting water that now drains down other basins is the engineering solution. New dams and pipelines/canals to bring the water to Gatun Lake would be the method to address that issue.