Panama Canal Drought Reduces Ship Capacity

A severe drought season in Central America has led to the Panama Canal Authority (ACP) reducing the capacity on larger vessels that pass through the canal.

By reducing the maximum draft for ships using the waterway, carriers have to lighten the loads on their vessels. This mainly impacts Asia to US East Coast loops, along with North and South American West Coast ‘all water’ services to Europe.

Some carriers have already reacted to the capacity limitations by implementing a PCC (Panama Canal Charge) of $500 per container, which we understand will be effective from June on certain trade lanes.

The Panama Canal is the major gateway and only crossing point for container ships moving between the Atlantic and Pacific Oceans, without circumnavigating the entire continent.

This drought season has hit the region particularly hard and especially the water supply to the canal. Two lakes, set around 25 metres above sea level and that rely on rainwater to flow down and operate the canal, have seen water levels drop significantly in recent weeks.

For further information, please do not hesitate to contact a member of the aptly named ‘Atlantic Pacific‘ team.