The Panama Canal, a crucial conduit for international trade, is currently facing limitations on the number of daily vessel crossings due to a significant drought. This situation, according to S&P Global, might disrupt global supply chains at a time when demand is particularly high.
In response to the drought, the Panama Canal Authority has implemented various restrictions throughout 2023. However, they increased the daily crossing limit to 27 from 24 last month, thanks to a rise in water levels at Gatun Lake, a key water source for the canal.
S&P Global has highlighted that the capacity constraints at the Panama Canal are beginning to impact supply chains. Although container ships have been less affected due to their prioritized status, the tightening situation is starting to change, with other types of vessels, especially bulk carriers, facing more significant challenges.
Should the anticipated rains arrive in May, the canal authority is prepared to increase the number of daily crossings to around 36, aligning with the average during the wet season. This adjustment is crucial for maintaining adequate water levels in the reservoirs that supply the canal, which is vital for accommodating shipping demands and offering alternatives to routes obstructed by geopolitical tensions, such as the blockages in the Suez Canal by Houthi attackers.
