Panama Canal Design Restrictions May Halt Coastal Shift Ship’s crew

From Mike Wackett (The Loadstar) –

The Panama Canal Authority (ACP) will further reduce the maximum allowable draft for ships traversing the waterway during a particularly severe drought season and will require shipping companies to reduce loading of the US Asia East Coast in Panama and commuter loops.

As a result, starting June 1, transpacific shipping lines will impose heavy surcharges on shipments on all waterways on the east coast of Asia and will reroute some of their loops through the Suez Canal.

“Panama’s drought season is creating canal draft issues and reducing Panama canal capacity,” Maersk said in its monthly market update.

Meanwhile, Hapag-Lloyd announced that, effective June 1, it will introduce a PCC (Panama Canal Charge) of US$500 per container for all cargo loaded across the canal on its Asia-US East Coast voyages .

“The lower water level in Gatun Lake is resulting in severe draft restrictions for ships traversing the Panama Canal,” Hapag-Lloyd said in a note to customers.

The severe drought has caused the level of Lake Gatun, the largest of the two lakes that feed the canal, to fall faster than predicted after rainfall between February and April was less than half the period’s average.

A shipping notice issued by the AKP said the maximum allowable draft for ships traversing the canal from May 24 would be reduced to 13.56m or 44.5ft.

“In addition, as of May 30, the maximum allowable draft for ships passing through the Neopanamax locks is 13.41 m (44 ft),” the statement said.

“ACP will continue to monitor Gatun Lake levels and provide timely notification of future design adjustments,” she added.

Commenting on the trans-Pacific trade route between Asia and the US east coast, Maersk said the network was “imbalanced” with some services being booked while others were underutilized.

Coastal shifting of cargo from ports on the US West Coast to ports on the Atlantic Coast has increased rapidly since the opening of the expanded Panama Canal in 2016, which allowed ships of around 13,000 TEU (new Panamax) to traverse the waterway compared to Previous restrictions limited the size of ships to around 4,500 TEU (Panamax), which significantly improved the travel economy for shipping companies.

Indeed, according to the latest findings McCown report Analyzing the performance of the top 10 US container ports in April, terminals on the East and Gulf Coasts handled 887,950 TEUs of container imports last month, compared to 812,611 TEUs of boxes imported at US West Coast ports.

In addition, the port of New York and New Jersey has now overtaken Long Beach as the second largest US import port, and is rapidly enclosing the number one port of Los Angeles.

“April was the 23rdapprox “It was a consecutive month in which the percent change in volume at East/Gulf Coast ports outpaced West Coast ports,” said report author John McCown.

However, as freight rates for the Asia-US East Coast trades rise due to draft restrictions this summer, US West Coast ports could recoup some of their lost business, especially if reports of an imminent settlement persist in long-term West Coast labor negotiations turn out to be correct.

The Loadstar is recognized at the highest levels of logistics and supply chain management as one of the finest sources of influential analysis and commentary.

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