Drought affecting Panama Canal threatens 40% of world's cargo ship traffic

A severe drought is threatening shipping on the vital Panama Canal, which is responsible for moving 40% of the world's cargo ship traffic. About two-thirds of the canal's traffic is either headed for — or leaving — the United States.

The canal, a linchpin connecting the Atlantic and Pacific Oceans, is renowned for its ability to save time and billions of dollars by offering ships a shortcut around the tip of South America. But the Panama Canal system depends on lakes whose levels are now "close to the minimum," said Boris Moreno, vice president of operations for the canal.

The region home to the canal has had an unprecedented dry season, leading to a significant decline in water levels within the canal, which relies on fresh water to operate. As a result, the canal's daily operations have been disrupted, with the number of vessels passing through each day reduced from 36 to 32. That has caused delays and traffic congestion at sea.  

Additionally, some ships are being forced to carry up to 40% less cargo to avoid hitting the bottom in low water levels.  

Moving ships through the canal's system of locks consumes vast amounts of fresh water, ranging from 55 to 125 million gallons per ship, depending on its size. Much of that water typically gets flushed into the ocean, and the Panama Canal Authority is now employing methods to store and reuse some of the water to address the crisis.  

The authority is considering diverting water from other rivers and constructing additional reservoirs, as the lakes that feed the canal also serve as the primary source of drinking water for nearby Panama City. 

As climate change brings hotter temperatures and prolonged dry spells to the tropics, the canal's long-term viability is now a subject of concern for many. 

"We are climate dependent so this issue of climate change to us is real," said Ricaurte Vasquez Morales, the canal's administrator. 

Antonio Dominguez, managing director for shipping giant Maersk, the largest single user of the canal, said he worries that prolonged drought could lead to delays and increased costs for shipping, potentially affecting Christmas merchandise and other consumer goods and making things "more expensive." 

"Everywhere, you have climate change impacting global commerce and we need to do something about it," Dominguez said.