Restrictions Could Remain in Place for at Least 10 Months Warns Panama Canal Authority
Following an unprecedented drought, the Panama Canal Authority has warned that a series of water saving measures - which were introduced during the summer - could remain in place for at least 10 months.
The water saving measures have resulted in a series of restrictions on shipping, including:
- Draft restrictions for ships transiting its larger neopanamax locks.
- A reduction in the volume of daily transits by 20% to just 32 vessels a day.
The draft restrictions in particular are likely to mean that the largest ships will be unable to use approximately 2,500 TEU of capacity.
Given the bottleneck that the restrictions are creating, the Panama Canal Authority has urged industry bodies to come together to share transit plans. Speaking to Splash247, Andy Lane, a partner at CTI Consultancy said: “Maybe the bulk and container segments such as the World Shipping Council, INTERTANKO, INTERCARGO and BIMCO along with the Panama Canal Authority can come together to strategically plan how to best use the limited resources in the short and medium term. Such cross-industry coordination and collaboration, I think would be a first”.
Although the current bottleneck isn’t having a notable effect on container spot rates, this is expected to change. Also speaking to Splash247, Niels Rasmussen, chief shipping analyst at BIMCO, said:
“The longer the situation persists the bigger the chances are of further freight rate increases and the likelihood that shippers will begin to divert cargo back to the US west coast ports and use rail to bring the cargo to its final destination”.
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- Adam Whittle