Panama Canal Delays Draft Restrictions but Lowers Number of Transits

The Panama Canal Authority delayed the planned further draft restrictions for vessels making the transit that had been due to go into effect yesterday, June 25. They publicly cited expected rainfall while CNBC is reporting that they are also lowering the number of daily transits through the original locks to converse water.

Economists have warned of the potential for a significant impact on global trade and especially in the United States, which remains the Panama Canal’s largest customer. The Panama Canal Authority reported that the draft restrictions are mostly impacting laden containerships. Forty percent of all U.S. container traffic travels through the Panama Canal every year, according to a report from CNBC. There have been reports of containerships offloading containers for shipment by rail as the canal increased the draft restrictions this year. At current draft levels, the Panama Canal Authority reports that LNG carriers which are the other large segment of the ships transiting the canals remain unaffected

“The U.S. is the main the main source and destination of our traffic,” Ricaurte Vásquez Morales, administrator of the Panama Canal Administrator told CNBC. “When you combine all of the commodities and containers to the U.S., it represents about 73 percent of our traffic.”

The canal authority had scheduled a further half a foot reduction in drafts starting yesterday for the Neopanamax locks. They were set to be reduced to 43.5 feet down from the recent 44-foot level and a peak at 50 feet until the spring of this year. The canal had also been scheduled to do a half-a-foot reduction that the Panamax Locks to 39 feet on July 9.

“Due to favorable weather conditions experienced during the past several days in the canal watershed, the Panama Canal Authority announces the postponement of the maximum authorized drafts,” they wrote in an advisory to shipping. Current levels that said would remain in place until further notice. “The ACP will continue to monitor the level of Gatun Lake and announce future draft adjustments in a timely manner.”

Panama’s weather service is forecasting some relief to the prolonged drought although global forecasts have said the onset of El Nino could result in further declines in rainfall even as the country enters its traditional rainy season. Near-term forecasts however predict as much as three inches or more of rain.

The Panama Canal Authority has also quietly begun to lower the number of vessels making the transit through the original locks. As reported by CNBC, a memo to shipping companies advised that the canal will save water by reducing the transits to 30 to 32 ships per day down from 34 to 36 ships transiting the Panamax locks each day. The report highlights it takes more than 50 million gallons to move one ship through one set of locks and unlike the newer locks the original Panamax locks do not recapture water used in the operation.

The possibility of reducing the number of transits had been mentioned as a possible means of conserving water that would have less overall impact on shipping. There was no indication of how long this could be used to stave off additional draft restrictions with canal executives telling CNBC they are sensitive to the three-week lead time from vessels loading to reaching the canal.