Drought at the Panama Canal might jeopardise the supply chain: S&P

MEXICO CITY: Global supply chains may be impacted at a time of high demand due to the extreme drought that has led the Panama Canal, one of the busiest trade passes in the world, to curtail daily crossings, S&P Global warned on Wednesday.

Since 2023, the canal has been subject to a number of limitations; nevertheless, as a result of rising water levels at the artificial Gatun Lake, which feeds into the canal, the Panama Canal Authority increased the number of daily crossings to 27 last month from 24.

According to S&P Global’s analysis report on the movement of raw materials and cargo, “supply chains are starting to feel the effects of capacity pressures at the Panama Canal.” “Container ships have yet to feel the impact in light of their priority status, although the situation is changing.”
Although bulk carriers, notably container ships, have suffered from transit limitations, container ships are given precedence when passing through the Panama Canal.
The canal authority intends to ramp up daily slots to around 36 per day, the norm during the wet season, if the anticipated return of rain in May occurs.
The demand from shippers looking for other ways out of the Red Sea, where Houthi rebels have barred ship passage in the world’s busiest waterway, the Suez Canal, has not been able to be met due to the requirement to maintain water levels at the reservoirs flowing into the canal.