Cyclical Weather Patterns and the Panama Canal

container ship

Published May 28, 2016 8:24 PM by Harry Valentine

The expanded Panama Canal is scheduled to open at the end of June with the intention of granting passage to neo-Panamax ships - except that weather conditions have reduced rainfall over the watershed area that sustains canal operations. 

The drought has resulted in a fresh-water draft restriction of 12.8 meters (42 feet) that would likely remain in effect by the time the newly re-constructed canal opens. That draft translates to a seawater draft of 12.48 meters that neo-Panamax vessels would likely have to observe. 

This enhances competition on maritime routes via Cape Town and via Suez as well as at other ports.

The draft restriction on the neo-Panama Canal and low world oil prices leaves ship operators with the choice of sailing a partially laden neo-Panamax ship via the Panama Canal or sail a fully laden neo-Panamax ship from Asian ports to American Atlantic ports via the Suez Canal or via Cape Town. Newly enlarged East Coast American ports such as Newark and Jacksonville would welcome the arrival of fully laden neo-Panamax ships while freight forwarders would prefer to dispatch such ships from Asian ports. Weather conditions would enhance the attractiveness of a super-port at Sydney, Nova Scotia.

Eastern Canadian Super Port

Critics have previously dismissed an Eastern Canadian super-port for very large container ships size ships. However, weather conditions may have just enhanced the business case to develop such a super port on the North American East Coast. 

While future weather patterns would during some seasons, provide sufficient water for the Panama Canal to transit fully laden neo-Panamax ships, future droughts are also possible. It is believed that cyclical weather patterns that included several seasons of drought compromised the agricultural economy of the Mayan Empire of South and Central America. Such weather patterns could impact American east coast maritime operations.

A neo-Panamax ship sailing via the Panama Canal at 80 percent capacity between an Asian and east Coast American port would be hard-pressed to compete against the identical ship sailing at full capacity via the Suez Canal. 

Unpredictable future weather patterns could discourage development of the Nicaragua Canal for very large container ships, leaving the routes via Cape Town and via the Suez Canal as viable alternatives. During future Central American drought, very large container ships sailing via the Suez Canal to an Eastern Canadian could carry double the load of a neo-Panamax ship sailing at part load via the Panama Canal. 

Cape Town Super Port

The drop in world oil prices has enhanced the competitiveness of sailing large ships via Cape Town instead of via the Suez Canal, where the shipping industry has to pay a transit tariff per container or per ton of bulk freight. Lower oil prices enhance the economics of sailing ships via Cape Town to ports located further north along the West African and American Atlantic coasts. Drought conditions and reduced draft enhances the viability of sailing a fully-laden neo-Panamax ship via Cape Town than a partially laden vessel via the Panama Canal.

The combination of future droughts in Central America, future periods of low oil prices, shipping alliances and increased future trade between Asia and the combination of West Coast Africa and east coast Americas enhances the business case to develop a trans-shipment super port at or near Cape Town to serve very large container ships (more than 18,000 TEUs). A future economic recovery in Brazil would enhance the business case to develop a terminal for very large container ships either at Santos or at Rio de Janeiro, with possible future development of such a terminal at or near 
New Orleans.

Future Alliances

Several analysts and critics have suggested that very large container ships may be too large to be fully viable unless the ship transportation industry forms alliances. Such alliances would enhance the viability of sailing such ships to a Brazilian port as well as to a port built at or near New Orleans to serve the south-central United States and Caribbean area. An alliance between east coast American coastal ship operators and operators of very large container ships that sail via the Suez Canal to an Eastern Canadian super port would be competitive against neo-Panamax ships sailing at part-load via the Panama Canal.

Future weather patterns could create an unpredictable situation at the Panama Canal that could transit fully laden neo-Panamax ships during some seasons and only transit partially laden neo-Panamax during other future seasons. Future Central American weather patterns present a logistical challenge to ship operators and to future shipping alliances that will need to plan for such occurrences. 

Panama Pumping Option

The energy industry in many countries operates mega-scale hydraulic batteries to store massive amounts of energy by pumping water to higher elevation. At present, navigation canals flow water to lower elevation to transit vessels while the technology to pump water to higher elevation is well-proven. 

The prospect of future drought could encourage Panama Canal management to examine the viability of retrofitting pumping technology at navigation locks, to pump water to higher elevation to transit ships to either higher or lower elevation. During periods of future drought, a minimal amount of water would flow into the ocean.

Pumping water uphill would require energy, with one or possibly a second mini-nuclear power station being an option. 

The severity of future drought would be a contributing factor to the viability of pumping water to higher elevation at each navigation lock to transit ships at higher rates of tariff. During future drought, higher ship transit tariffs could prevail on a pump enhanced Panama Canal. During seasons when rainfall is plentiful, critics would question the wisdom of the investment as the pumps and the power stations that supply the energy for their operation remain idle. 

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.