Panama Canal water shortage plunges world trade into chaos

A water shortage has hit the vital Panama Canal shipping route meaning fewer ships will be allowed through each day sparking predicted losses of over £150million.

Fresh water supplies the lakes that in turn fill the locks in the canal that has been transporting ships through Central America since 1914.

But a prolonged dry season has seen water levels in the lakes drop so low there is less and less available to feed the canal.

The Pacific Ocean at the west end of the 50-mile-long waterway is one metre higher than the Atlantic in the east, meaning locks are needed to raise and lower the levels to allow ships to pass through.

Speaking to reporters, Panama Canal administrator Ricaurte Vasquez said Thursday that the route will experience a revenue drop of between $150million and $200million (around £150million) in its forecast for the fiscal year running from October 2023 to September 2024.

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Vasquez said the budget he will present to the Assembly of Deputies foresees revenues of 4.9 billion dollars for the new fiscal year, which will exceed the $4.652billion budgeted for the year to come, the highest in history.

‌The strategic inter-oceanic canal, whose main users are the United States and China, has a maximum capacity income in full operation of $5.7million annually and the contributions or profits transferred to the central government amount to $2.544billion.

Due to the reduced availability of water because of the delay in the rains that supply the lakes that provide water for the population and the locks, the daily number of ships crossing the route on Sunday was reduced to 32 instead of the 36 to 38 that cross the route in the normal period.

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The canal remains operational for world trade and according to the authorities, the passage this week of Evergreen’s Ever Max, which had to unload part of its containers, shows “the competitiveness of the route” despite the adjustments to the draft, i.e. the depth a ship reaches from water level.

‌The rainy season, which in normal times runs from April to December, seems to be just beginning this year, with the first heavy rains falling in recent weeks.

Rainfall is vital to maintain the level of the Gatun and Alajuela lakes, which supply fresh water to the canal and provide fresh water to a large part of the population.

The first vessel, the American cargo ship SS Ancon, passed through the canal on August 3, 1914.

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