The Panama Canal, a vital shipping artery connecting the Atlantic and Pacific Oceans, is experiencing disruptions that are causing significant delays for ships without reservations.
A severe drought in Panama forced the canal to restrict water usage, leading to longer wait times for non-booked vessels. This caused bottlenecks, higher freight costs, and some vessels diverting to avoid delays. While the backlog eased slightly, the restrictions are expected to last at least 10 more months despite recent rain, as levels haven't risen enough to fix the situation.
The Panama Canal experienced a sharp decline in transit numbers this November, with a 22% drop compared to October. This decline affected both the older Panamax locks and the newer Neopanamax locks, which are crucial for large container ships and energy exports. The Neopanamax saw a particularly steep drop of 28%, indicating a potential shift in shipping routes for these critical vessels.
The situation is further challenged by upcoming reservation cuts in December and January, raising concerns about potential further drops in transit numbers. This decline, particularly during the peak season for American grain exports, paints a worrying picture for the canal's future performance.
If you are shipping cargo through the Panama Canal, it is important to be aware of the current disruptions and to factor in the potential for delays. You may want to consider booking a reservation in advance, or using an alternative route.
PCC Logistics is here for you on the West Coast.
Wait times have tripled or even quintupled for ships without reservations. This is due to a reduction in the number of daily reservation slots available, from 32 at the beginning of November to 18 by February 1st.
The average wait time for southbound transits (Atlantic to Pacific) without a reservation is now over 11 days. This is more than five times longer than the wait time at the beginning of November.
Panamax ships, which are the smaller vessels that transit the older locks, are facing the longest wait times. Some Panamax supers (with a beam of 91 to 107 feet) have been waiting for up to 25 days.
Neopanamax ships, which are the larger vessels that transit the newer locks, are also facing longer wait times. The average wait time for southbound Neopanamaxes without a reservation is now triple what it was at the beginning of November.
Impact on Shipping
The backlog of ships waiting to transit the canal is growing. Ship-position data shows that there were 33 dry bulk carriers, 19 product tankers, and 12 LPG tankers waiting at anchor on Wednesday.
The reduction in reservation slots is also impacting container shipping. French carrier CMA CGM has confirmed that the canal situation is "taking a severe toll on operations." MSC, the world's largest ocean carrier,said Monday that the Panama Canal situation is having "a direct impact" on its operational costs.
PCC Logistics is your West Coast logistics partner that can help you navigate the disruptions at the Panama Canal
PCC Logistics is a leading third-party logistics (3PL) provider with a strong network of warehouses and transportation providers on the West Coast. We can help you develop and implement a plan that will minimize the impact of Panama Canal delays. Contact Us Today
"To ensure the canal remains open to the world of commerce, the Panama Canal Authority has implemented strategic measures over the past several months to mitigate the impacts from climate change and a subsequent dry season."
- Panama Canal Authority