Hundreds of ships wait to transit Panama Canal amid drought

Waiting times for the Panama Canal have risen dramatically after the number of crossings have been capped due to serious drought, with the numbers in the queue steadily increasing.

The canal uses three times as much water as New York City on a daily basis and needs rainfall to replace it. But the rainy season is yet to arrive in Panama, and the canal is going through its driest spell in more than a century.

The number of daily transits through the canal has been capped at 32 by water authorities (as opposed to the normal 36), according to Reuters.

The restrictions, which came into place in late July, have led to a bottleneck of ships waiting for their turn to cross and sent companies scrambling to find alternative routes.

In what is being called the “world’s worst traffic jam,” some 200 cargo ships are waiting to pass at the Panama Canal as the area experienced its worst drought in 100 years. pic.twitter.com/SHh6wa8muF

— Massimo (@Rainmaker1973) August 20, 2023

“The delays are changing by the day. Once you make a decision to go, there is no point to return or deviate, so you can get stuck,” Tim Hansen, chief commercial officer at Dorian LPG, which operates large gas carriers, told the Wall Street Journal.

Ricaurte Vásquez Morales, the administrator of the Panama Canal, warns the restrictions may remain in place for the rest of the year.

“The canal communicates with its customers so that the information allows them to make the best decisions even if it means that they may choose another route temporarily,” Vásquez Morales told media.

“Demand remains high, which proves the Panama Canal remains competitive in most segments, even with measures to save water.”

Containerships, the canal’s biggest users, have been (generally) unaffected as they work on fixed schedules and book crossings up to a year in advance.

However Lars Oestergaard Nielsen, head of customer delivery (Americas) for A.P. Moller-Maersk, told the Daily Mail: “We had two ships that couldn’t book, and it was quite expensive.

“We went to an auction and paid $900,000 on top of $400,000 normal toll fee for each ship to cross.”