Photo courtesy Panama Canal Authority
The increase in water levels in the Panama Canal has sparked hopes of a potential return to normal operations for container shipping after over a year of restrictions due to a severe drought. However, experts warn that the situation, while improving, is far from returning to pre-restriction levels.
Starting Thursday, the Panama Canal Authority has increased the daily number of ships allowed to transit the waterway from 24 to 31.
Peter Sand, Chief Analyst at the Oslo-based firm Xeneta, says the increase will provide limited relief for container shipping services, since the increase corresponds additional slots in the smaller panamax locks. However, a more meaningful change is anticipated on June 1, with an additional transit slot for larger Neopanamax ships (including containerships), which will raise the daily total to 32. Meanwhile, authorities also plan to increase the draft limits for Neopanamax ships from 44 feet to 45 feet on June 15, bringing it closer to the normal limit of 50 feet.
The disruption caused by the water shortage in the Panama Canal has had a significant impact on scheduling reliability and spot rates.
As the Panama Canal slowly transitions towards normal operations, Sand says businesses need to be prepared for a slow recovery that is dependent on unpredictable factors like rainfall. While hopes for a return to ‘normal’ are high, the reality may be a different.
“Xeneta has long-held the position that the impact of drought in the Panama Canal will be felt for years rather than months,” Sand says.
