Panama Canal ‘Practically Back to Normal’ With Rainy Season in Full Swing
The Panama Canal expects to increase the number of daily transit slots for vessels to 36 from the current 34 beginning in September, according to the waterway’s deputy administrator.
The Panama Canal Authority (ACP) has not officially revealed a date for return to 36 ships, but the arrival of the rainy season has allowed the authority to ease restrictions on passage, enabling more cargo to flow through the waterway.
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Throughout June and July, the canal expanded the maximum authorized draft for a vessel from 46 to 48 feet, getting the 50-mile waterway closer to its natural limitations for a 50-foot draft.
The initial draft limitations were implemented May 30, 2023, when the canal endured a months-long drought that raised concerns about the effects of shallow water levels on the waterway’s operations.
The restrictions created such a bottleneck last summer that there were as many as 161 vessels reported to be queued up to pass through the canal in August, with the majority having waited without making a reservation first.
On Aug. 5, the ACP will tack on an extra new booking slot for the Neopanamax locks, which facilitate the movement of container ships longer than 966 feet. The added slot will bring the total number of daily transits to 35 ships.
The update builds on improvements announced earlier in June, which included an increase in daily transits from 32 to 33 beginning on July 11, and again to 34 on July 22.
“Now (the operation) is practically back to normal. We have 34 transits (per day) and on August 5 we will increase to 35 transits,” Deputy Administrator Ilya Espino de Marotta told Reuters Monday. “In September, we’ll be able to increase to 36.”
The maximum sustainable capacity of the Panama Canal, including both the Panamax and Neopanamax locks, is approximately 36 to 38 vessels per day.
The ACP has already said as far back as April it expects the canal’s conditions to fully normalize by 2025 if rainfall continues as expected.
A return to normalcy at the Panama Canal would be a major win for global trade. Ships from all over the world transit the original and expanded Neopanamax locks daily, with between 13,000 and 14,000 vessels passing through each year, according to the ACP. The waterway serves more than 180 shipping routes, connecting 170 countries and approximately 1,920 ports around the world.
Transiting the Panama Canal considerably reduces voyage time for vessels traveling from the U.S. Gulf Coast to markets in Asia. Today, 71.5 percent of cargo transiting the Panama Canal originates or is destined for the U.S., the authority states.
To ensure that a repeat of 2023 doesn’t happen again if drought conditions were to return, the canal aims to implement long- and short-term solutions that can optimize the use and storage of water at the canal.
The ACP wants to build a new reservoir that is expected to cost $1.6 billion and take six years to construct, but still needs final approval from 12,000 people who live in the 200 neighboring villages around the Indio River basin. That reservoir would complement the water already provided by the manmade Gatún Lake, which saw water levels plummet throughout 2023, and provide capacity for 11 transits in the event of another drought period.
Other potential solutions include the identification of alternative sources of water from the 51 watersheds and lakes in Panama, the ACP said.
Currently, water levels at Gatún Lake are healthy, and are expected to be for the remainder of the year if the rainy season persists. As of Wednesday, Gatún Lake water levels have a depth of 84.4 feet, which is one foot deeper than the 83.4-foot average since 2019. The water levels represent just under a five-foot improvement over the 79.5-foot depth in July last year.
By Sept. 1, water levels are expected to reach 85.2 feet—one foot deeper than the previous five-year average of 84.2 feet during the month. A month later, depth should increase again to 86.1 feet, well ahead of the 84.5-foot depth on average since 2019.
With the rainy season holding up, the canal now has a bullish outlook for the 2024-2025 fiscal year, which starts in October. The ACP expects to boost total revenues by 18 percent to $5.6 billion, with state contributions growing 13 percent.