Drought at Panama Canal

The Panama Canal Authority has implemented restrictions on vessels transiting through the canal and has advised that further restrictions could come if the water levels continue to decline.

The Panama Canal uses fresh water from Gatun Lake to raise and lower vessels as they pass through the canal. The region is currently facing a drought with May being the driest month since 1950. Water levels in the lake are currently at 80ft (as of June 6th) which is at an all-time low. The last period of intense drought in the Canal took place in 2019 – 2020, according to Seatrade-Maritime News.

Vessel restrictions

The Panama Canal Authority has implemented draft restrictions (how deep the vessel can sit in the water). To meet the new draft restrictions, vessels need to carry less weight, effectively meaning, the vessels need to reduce the number of containers on board. So far, these restrictions are only for Neopanamax vessels. Draft levels for Panamax vessels remain unchanged. Further reductions in the max draft depth could be implemented if the water level continues to drop.

If the conditions continue to worsen, the Canal Authority is contemplating use of extreme measures including limiting the number of daily crossings. Currently 35 ships cross the canal per day. However, the Canal Authority has warned that this number could drop to 28-32 crossings.

Potential mitigations

To help mitigate the situation the Canal Authority has implemented a series of water saving measures. In the Panamax locks the vessels are scheduled in such a way so they can reuse, to the greatest extent, the water needed to raise and lower the ships. And they are currently reviewing a similar approach for the Neopanamax locks.

Current operations

DSV is currently not seeing an impact to our operations and the transit time for the vessels crossing the canal is at normal levels. However, this could change in the coming months if fewer vessels and containers are able to cross the canal. Furthermore, it is expected to be an El Niño year which could mean a longer dry season for Panama in 2024. DSV is monitoring the situation very closely and will be sure to keep our partners and clients informed. For any questions or concerns, please reach out to your local DSV representative.