Panama Canal drought forces Maersk to start using 'land bridge' for Oceania cargo

View of stranded boats at Alhajuela Lake through the summer time drought, in Colon province, 50 km north of Panama City, Panama, on April 21, 2023. The Alhajuela lake is without doubt one of the foremost lakes that provides water to the locks of the Panama Canal and is at its lowest degree of latest years.

Luis Acosta | Afp | Getty Images

The Panama Canal drought conditions have led delivery big Maersk to inform purchasers this week that vessels with freight from Oceania (Australia and New Zealand) will not traverse the canal due to the continued low water ranges. Maersk shall be servicing the consumer’s containers by using a “land bridge.”

Instead of going by way of the Panama Canal, the vessels would name the Ports of Balboa, Panama, on the Pacific aspect — dropping off cargo heading for Latin America and North America and selecting up cargo heading for Australia and New Zealand. The Port of Manzanillo, Panama, on the Atlantic aspect, shall be used for dropping off cargo heading for Australia and New Zealand and selecting up cargo heading for Latin and North America. Once on the port, containers can be loaded or unloaded and would then transfer through an present rail over a distance of 80 kilometers throughout Panama to be picked up by one other vessel. The change in service covers two transits per week, in accordance to Maersk.

A extreme drought has led to water depth and weight restrictions on ships passing by way of the Panama Canal, and extra container surcharges imposed by ocean carriers on shippers for months.

“Based on present and projected water ranges in Gatun Lake, the Panama Canal Authority (ACP) has wanted to make reductions to the quantity and weight of vessels that may go by way of the canal. Whilst we proceed to work intently with the ACP, moderating and aligning our operations to match the modifications, we have now made modifications to companies to make sure that our clients are impacted as minimally as potential,” Maersk’s consumer advisory said.  

Maersk emphasised there can be no delays for Northbound cargo stopping in Philadelphia and Charleston. Companies like McDonald‘s import their Wagyu Beef from Australia and use this route to import their beef into the East Coast.

For the Southbound vessels, Maersk cautioned clients might expertise some delays.

The firm can be eliminating the delivery route to Cartagena, Columbia.

The Panama Canal Authority has elevated the variety of transit slots to 24 day by day this month after first asserting a discount of vessel transits to 18 in February. But that is far beneath the day by day transits of 36.

The Panama Canal is common for East Coast commerce as a result of it’s quicker than different choices. The delivery time for ocean cargo from Shenzhen, China, to Miami, Florida, using the Suez Canal takes 41 days. Traveling by way of the Panama Canal takes solely 35 days. The newest water degree points for the canal come as it’s anticipated to obtain extra vessel site visitors as ocean carriers keep away from the Red Sea due to the continued Houthi attack risk, with Maersk amongst shippers that recently had to halt Red Sea site visitors.

Forty percent of all U.S. container site visitors travels by way of the Panama Canal yearly, which in all, strikes roughly $270 billion in cargo yearly.

Late December to April is historically Panama’s dry season.

According to the PCA, it takes round 50 million gallons of contemporary water to transfer a vessel by way of one of many locks. The Panamax locks lose extra water in contrast to the Neo-Panamax lock. The Neo-Panamax locks have a water restoration system which might reclaim 60% of the water used throughout a vessel’s transit by way of the locks. The Panamax lanes do not need the water-recapturing means of the Neo-Panamax locks.  

Maersk burdened that as a complete it’s not bypassing the Panama Canal, however its resolution associated to the Oceania freight will influence the declining cargo quantity passing by way of the Panama Canal. In 2023, it was reported 510 million tons of cargo traversed the canal, which was eight million tons lower than 2022.  Even with the lower in volumes, the Canal Authority reported file income from October 2022 to September 20, 2023. Surcharges and different costs added to cross the canal fueled the income enhance.  From October 1, 2022- September 30, 2023, the PCA obtained $3.3 billion. That was $319 million larger than a yr earlier.

The Panama Canal Authority didn’t instantly reply to a request for remark.

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