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The Panama Canal continues to experience serious challenges because of drought. The Panama Canal is not a sea-level canal and instead utilizes locks, which means the operation of the canal functions via normal precipitation to fill Gatun Lake, the reservoir that feeds fresh water to the canal locks. According to the Panama Canal Authority (ACP), over the past five years, the average water level at Gatun Lake during November is 86.7 feet. The current depth is 79.8 feet.

"The drought caused by the El Nino phenomenon continues to impact the Panama Canal's reservoir system and, as a result, water availability has been reduced. Therefore, with less than two months left until the end of the rainy season, the Canal and the country face the challenge of the upcoming dry season with a minimum water reserve that must guarantee supply for more than 50% of the population and, at the same time, maintain the operations of the interoceanic waterway," notes ACP in a press release.

"Since the beginning of the 2023 dry season, the Panama Canal adopted several water-saving and conservation measures in the transit operation, including the use of water-saving basins in the Neopanamax Locks and cross-filling in the Panamax Locks," according to the ACP website. "In addition, the late arrival of this year's rainy season, and lack of precipitation in the Canal watershed has obliged the Canal to reduce the transit capacity to approximately 32 vessels per day since July 30, 2023, while managing the available rainfall over the watershed to maintain Gatun Lake at a level that would offer a competitive draft for our clients. On Sept. 29, 2023, the Canal announced an additional reduction in capacity, effective Nov. 1, 2023."

The ACP notes that, even with all the measures taken, the level of Gatun Lake has continued to decline to unprecedented levels for this time of year.

"The recorded precipitation for October has been the lowest on record since 1950 (41% below), and so far, 2023 ranks as the second driest year for the same period. Based on the rainfall projections for the following weeks, which as of today is expected to be 38% less for the rest of the year, the ACP finds it necessary to further reduce the daily transit capacity to postpone the need for additional draft reductions below the current 13.41m (44 feet) TFW (Tropical Fresh Water of Gatun Lake.)" Here is a link to the latest schedule: https://pancanal.com/…

On Oct. 20, the ACP said in a statement on its website that the extraordinary auctions in the Neopanamax locks, as well as the daily auctions offered in the Panamax Locks (for supers and regulars) would be suspended for transit dates Oct. 23 until Oct. 31, 2023.

"Therefore, from Saturday, Oct. 21, until Sunday, Oct. 29, the abovementioned auctions will not be offered for these dates. The daily auction offered seven days prior to transit in the Neopanamax locks will remain unchanged. The ACP may announce additional measures as deemed necessary to guarantee operational efficiency. Any slots that become available with less than four days due to cancellations, changes in date or other reasons in the Panamax locks, will continue to be offered through extraordinary auctions. Only the Panamax locks daily auctions are being suspended."

TradeWinds, a global shipping news source, reported Nov. 1 on its website, "Owners and charterers desperate to get their ships through a drought-hit Panama Canal have driven transit slot auction prices to a new record. Fearnley Securities reported that on Oct. 30, bidding for a crossing was concluded at a whopping $2.85 million. Avance Gas chief executive Oystein Kalleklev told TradeWinds that the new record holder was a VLGC (very large gas carrier) heading southbound. Ships had been paying up to $2.4 million so far in 2023." These auctions are usually won by vessels carrying LNG (liquefied natural gas) or LPG (liquefied petroleum gas).

Mike Steenhoek, executive director at Soy Transportation Coalition, told DTN via email, "The Panama Canal is a critical link in the supply chain for U.S. soybeans and grain -- facilitating a significant volume of exports originating from the Gulf of Mexico to be shipped to customers in Asia. In 2022, approximately 600 million bushels of U.S. soybeans transited the canal. Delays at the Panama Canal will continue to be costly and will cause exporters to explore alternatives. The recent low water conditions on the Mississippi River and the current conditions at the Panama Canal serve as a reminder that lack of precipitation can impede the ability to grow a crop but also impede the ability to transport that crop."

According to the American Commercial Barge Line website, "Due to the lack of rainwater, there is significant delay to transit through the Panama Canal. Both north and southbound vessels are multiple days behind schedule, with smaller vessels averaging roughly a week's worth of delay. In turn, expect a delay to berthing schedules in the Gulf (NOLA, Mobile, Houston)."

As of now, there is not much relief expected in the near term for the drought conditions in the Panama Canal, according to ACP, and expectations are that further reductions to transit through there could be put in place.

Link to vessel statistics and transit backlog in the Panama Cana1: https://pancanal.com/…

Link to Gatun Water Level Indicators: https://evtms-rpts.pancanal.com/…

Link to information about the Panama Canal: https://www.britannica.com/…

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow her on X, formerly Twitter, @MaryCKenn

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