A historic drought is causing a huge traffic jam at the Panama Canal
AYESHA RASCOE, HOST:
The Panama Canal is one of the world's major trade routes, but currently it's experiencing a huge traffic jam with dozens of ships backed up in both the Atlantic and Pacific Oceans. The cause? An historic drought in Panama, which has reduced the canal's water levels. Joining us to discuss the potential impact on global trade is Adil Ashiq, head of the Americas for the maritime intelligence firm MarineTraffic. Welcome to the show.
ADIL ASHIQ: Thank you, Ayesha. Happy to be here.
RASCOE: So can you explain how the drought in Panama is causing these delays? I mean, I think I'm right in saying that the canal uses three times as much water as New York City every day. Is that correct?
ASHIQ: Yes, that is correct. And I think one of the biggest facts of the canal that people don't realize is that it is not actually fed by ocean water. It's, in fact, fed by fresh water that's collected through lots of the rainfall that was dammed when the canal was built. So Panama is notoriously very wet - one of the wettest countries in the world, actually. So this is very unprecedented, that the rainfall amount is not replenishing the lake, which is known as the Gatun Lake. And so the levels aren't sustaining the volume of ships traveling in and out.
RASCOE: OK. And so does that mean that some of the ships are being forced to offload some of their goods or to be lighter?
ASHIQ: Yeah, no, great question. So when ships go from ocean to ocean, they have to go through a tier of locks. And so these locks - they will rise because Panama Canal actually is above sea level. So once the vessel is at the level of the canal itself, this makes it a navigation concern for a vessel. To combat this, vessels technically need to be lighter so that their draft, basically the amount of ship that's underwater, doesn't run aground.
RASCOE: And I would imagine that's money, if you have to transport less goods than you otherwise would. Are there also delays?
ASHIQ: Yes, definitely. If ships are carrying less cargo, then that's less trade flowing through the canal. And in terms of the traffic, the jams, the delays that we're actually seeing at the canal for both the Pacific and Atlantic are actually about 30% more vessels waiting versus the average that we've seen in the past.
RASCOE: So what can authorities do in Panama other than just hope for rain?
ASHIQ: So they're building additional reservoirs. They're trying to understand ways that they can reuse water, looking at ways to dam other areas to have a backup supply in case these conditions can worsen in the future. And we have to think 20 years, 50 years, 100 years down the line.
RASCOE: Are shipping companies looking for different routes, since they're having issues with the Panama Canal?
ASHIQ: Absolutely. So in terms of the type of shipping, Ayesha - so if we look at the container trade - container vessels haven't really been impacted much by delays because they generally will get priority. However, in terms of bulk trade - so lots of raw materials that are used in manufacturing or say, gasoline - this market specifically is starting to see those types of delays. And sometimes these vessels are loaded so heavy that they simply cannot transit the canal, and they have no choice but to sail around South America.
RASCOE: That's Adil Ashiq from the maritime intelligence firm MarineTraffic. Thank you so much for being with us.
ASHIQ: Thank you, Ayesha.
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