Tag Archives: maritime trade

Challenges and Alternatives for the Panama Canal: Navigating Unforeseen Drought Effects

Alternative routes, reduction in cargo and a new limit on the number of ships that cross the Panama Canal daily are the measures that the Administration has had to take in order to reduce the water consumption of the route.

The drought that has settled in the canal, contrary to what was expected at the start of the dry season, has led to an unusually difficult month of August for the merchant marine.

Currently, ships are detained for an average of 270 hours, about 11 days, before being able to cross the road in a northerly direction.

In the case of the south, it drops at 233 hours (approximately 9 days). Both figures exceed those of 2022, which were established at 73 and 71, respectively.

Now, the doubt about a possible crisis for next Christmas worries the economic sector.

However, Jordi Spin, general secretary of Transprime (Spanish association of loaders), has indicated in an interview for 20minutos.es that “prices will become more expensive, but I would not dare to say that there will be a crisis”.

Economic consequences for Spain

“It can be said that at Christmas there will be problems. The drawback is the high cost and congestion, everything is going to be more expensive,” says Spin.

In his case, he does not believe that it will reach the level of an economic crisis since, on this occasion, natural gas is the only one affected.

In order to avoid further damage to perishable products, the Panama Canal has prioritized its passage over that of tankers and oil tankers.

For this reason, the delay caused on the road will be noticed in a practically unique way in this sector of energy trade.

“In the short term it is difficult to know the energy demand that there will be, but right now the demand for liquefied natural gas is low, so it will not have a significant impact in the short term,” declared the general secretary, who explained that On the other hand, the rise in prices in terms of product transport will be noticeable: “If it was expensive before, now it will be more so.”

Alternative pathways

Now, the 32 boats per day (36 in normal conditions) that will be able to cross the road will see the maximum cargo weight reduced. In addition, the draft limit has also been affected: the maximum allowed is 44 feet, equivalent to 13.41 meters.

All this has been established based on current meteorological values, in order to reduce water consumption and prevent the possible arrival of the El Niño phenomenon, whose effect is expected before the end of the year.

Spin, in favor of the management of the Panama Canal crisis, points out that “the good news is that we have learned”.

“With the pandemic and the Suez case in 2021, we saw that we cannot wait to look for plans until everything is a disaster,” he explains, referring to the warnings that the channel’s Administration has been issuing for a few months, and of the that the merchants have taken notice.

“Alternative routes can be made to bring the products. The issue is that, if not all maritime transport arrives on time, now only 40% of the ships will,” said Jordi Spin, who defends taking alternative routes.

For this reason, the President of Mexico, Andrés Manuel López Obrador, has taken the opportunity to propose the Interoceanic Corridor of the Isthmus of Tehuantepec (CIIT) as a solution for world trade, which could improve the connection between the Atlantic and Pacific through the ports of Coatzacoalcos and Salina Cruz.

The first port would connect with Europe and the United States. The second to the United States with Asia, Central America and South America.

Another route contemplated by the authorities would be the Arctic, although at the moment it is not an option. The desired route, marked by large polar ice formations, is not yet passable, although forecasts suggest that it may be in a few months.

The Suez Canal, a ‘choke point’

This Wednesday, a collision between the tanker BW Lesmes and the oil tanker Burri caused various delays in the Suez Canal.

The first, 295 meters long, was in charge of transporting liquefied natural gas when, unexpectedly, it was forced to stop due to a technical failure, according to the Canal Authority.

The strong current that caused the “braking” caused the Burri, with a length of 250 meters, to have a slight contact the first. Although it was fixed in a matter of hours, it caused delays in business activity.

In 2021, the Canal suffered a blockade that not only affected trade, but also international security, according to Haizam Mirah Fernández, principal researcher for the Mediterranean and Arab World at the Elcano Royal Institute, in an interview for 20minutos.es conducted that same year.

“Transit through the Suez Canal also affects US military naval fleets and aircraft carriers,” he said, warning that this geographical point is undoubtedly a choke point.

This term, derived from the English choke point, refers to that route that, if it collapses, has consequences in any type of field, even causing an “exceptional situation in peacetime”, according to the expert.