Holiday shopping may face shipping delays as drought cuts crucial Panama Canal shipping lane access
"It is the worst situation since the middle of last century," said chief meteorologist Jon Davis for Everstream Analytics, a world leader in supply chain analytics.
Panama Canal drought could impact holiday shopping
Drought conditions continue to intensify along the Panama Canal. That's making it harder and harder for ships to pass through. Everstream Analytics chief meteorologist Jon Davis joins FOX Weather to go over how this could impact holiday shoppers.
As the holiday shopping season begins, a critical shipping route linking the Atlantic and Pacific oceans faces delays due to severe drought, potentially impacting the delivery of gifts this Christmas.
The water levels in the Panama Canal have significantly dropped, causing difficulties for ships passing through. To address this, the Panama Canal Authority has gradually reduced the number of ships allowed to pass since August from 36 to 32 per day.
This aerial picture shows dozens of ships waiting to cross the Panama Canal as it maintains restrictions on the crossing of vessels due to a drought in Panama City, on September 10, 2023.
(IVAN PISARENKO/AFP / Getty Images)
The authority plans to further decrease this number to 18 by February through successive monthly cuts. In addition, weight and depth limits have been set, which means only smaller ships and those carrying less cargo can use the 51-mile passage.
Intensifying drought impacting Panama Canal operations
The Panama Canal operates 365 days a year but due to an intensifying drought and low water levels, ship weights and crossings have been reduced to 32 vessels per day according to operators.
Lake Gatun is an artificial freshwater lake located in Panama, which is an integral part of the Panama Canal system. The lake has reached its lowest water level since 1965 due to the lack of rainfall in the region, Everstream Analytics chief meteorologist Jon Davis told FOX Weather.
"It is the worst situation since the middle of last century," Davis adds.
DROUGHT FORCES PANAMA CANAL TO REDUCE MAJOR SHIPPING TRAFFIC
A look at Lake Gatun's water levels over the last 10 years.
(Everstream Analytics)
Davis warned that the Panama Canal plays a crucial role in global commerce by facilitating the transportation of a substantial amount of goods, and an impact would be felt across all sectors.
While coal is one of the items transported through the canal, liquefied natural gas (LNG) is a more significant energy commodity that the U.S. exports worldwide, particularly to Asia.
"Many agricultural products are shipped both from and to the U.S.," Davis adds. "The canal is a major corridor for container ships, so products coming to the U.S. from China, for example, are being delayed … i.e., the impacts on Santa’s delivery schedule."
A shopper carries bags in San Francisco, California, US, on Wednesday, Dec. 21, 2022.
(David Paul Morris/Bloomberg / Getty Images)
In an effort to get goods where they need to go on time, shipping companies are distributing loads across multiple boats to stay under weight and depth limits. Some companies are taking longer routes around the Cape of Good Hope, Cape Horn and the Suez Canal.
"No significant improvement is expected in the short-term as rainfall across Panama will be well below normal through the remainder of November," Davis said, "Longer-term, the strengthening El Niño event in the Pacific Ocean is an item of concern since it tends to be a suppressor of rainfall in Panama and the southern portion of Central America."
As a result, no improvement is expected in the water levels of the freshwater lakes in Panama through the end of the year and into the first part of 2024, Davis adds.
"This area will be entering the dry season later this year and into the first few months of the New Year," he said. "During El Niño events, the dry season tends to start early in Panama and once established, rainfall prospects tend to be poor."