Panama Canal to keep borders while drought reaches lake level Ship’s crew

By Michael McDonald

(Bloomberg) – The Panama Canal is likely to maintain restrictions on shipping vessels this year as a drought has caused water levels on its main lake to drop to its lowest level in four years, prompting a number of ships to hit the Waiting for passage through the waterway.

The Canal Authority said during this year’s drought it will leave draft restrictions, which limit a vessel’s depth in the water, at no less than 44 feet (13.4 metres) for large Neopanamax vessels. Ricaurte Vasquezthe agency’s administrator said in an interview from Panama City on Wednesday.

The limitation will allow most ships to pass, although some ships such as container ships and bulk carriers will have to reduce their cargo, he said.

To maintain a draft of 44 feet is the responsibility of the canal authority restrictive the number of ships crossing the canal each day. The Canal Authority currently allows about 30 to 31 vessels per day to transit the waterway, up from 36 to 37 “on a very good day,” Vasquez said.

Allowing more passages would result in a further drop in the water level at Gatun Lake, which is expected to drop to 79.5 feet by August from the current 79.7 feet the lowest since July 2019 during a previous drought.

Water from the lake is used to fill locks during passage and then washed out to sea. The freshwater lake also provides drinking water for about half of Panama’s population.

Vasquez said the strategy, combined with expected rainfall, aims to bring the lake’s water level back down to 84 feet by mid-November, when the next dry season is expected to begin.

“We regulate the number of passages to make sure we balance rain inflows versus passage outflows and try to keep lake levels at a certain minimum to ensure a 44-foot draft,” Vasquez said. “We are rain eaters. We need to make sure we value every drop that falls in the lake through storage or proper use.”

The restrictions have resulted in longer wait times for ships crossing the Channel. According to the Panama Canal, 59 ships are currently queuing for passage. Vasquez said the Canal Authority will give priority to ships that have booked transit slots, while unbooked ships will be handled on a standby basis.

Should the channel receive more rain than expected, this could increase the draft. Authorities will announce the changes in time for shippers and the Canal Authority to plan, Vasquez said.

“It’s turning into a very good analytical exercise,” he said.

This year’s El Niño phenomenon has resulted in drier than usual conditions in Panama. As droughts become more frequent and worse, and ship sizes increase, the canal is looking for ways to increase its water supply while maintaining an adequate supply of drinking water.

The canal authority worked with the US Army Corps of Engineers to find additional water sources in their current watershed. The canal authority received an initial report from the engineering firm stating that there are no solutions within the canal’s watershed, meaning the canal authority must find new water sources outside of its jurisdiction.

“It seems like a minor conclusion, but it’s an important conclusion,” Vasquez said.

Through a referendum, Panamanian law bans the Panama Canal Authority, a semi-autonomous agency, from building additional reservoirs. Construction of a new dam and reservoir outside the canal’s watershed will require legislative action to lift the restriction, otherwise the government will allow it to be built, Vasquez said.

The Canal Authority board will meet on July 6 to discuss an action plan and then meet with government officials over the next four weeks to chart a further path, Vasquez said.

Securing an additional water supply will be critical to the future of the waterway, Vasquez said.

“We are considering every possible solution,” he said. “To stay relevant, we have to do this.”

© 2023 Bloomberg LP

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