Panama Canal returns to normality

With the increase in water levels in the Panama Canal, the hope of restoring the normal functioning of container shipping after prolonged drought restrictions is growing. However, experts warn that the full recovery of the operation before the drought is still uncertain.

The increase in water levels in the Panama Canal allowed for an increase in the number of ships passing through this strategic waterway. Since Thursday, the Channel authorities have increased the daily number of passages from 24 to 31, which is an important step towards returning to normal traffic before the drought.

Peter Sand, the chief analyst at Xenata, notes that this increase brings some relief to container shipping. Increasing slots in smaller panamax locks is an important step, but even greater changes are expected on 1 June. It is then planned to add an additional transit slot for larger Neopanamax ships, which will raise the daily number of transitions to 32.

The Panama Canal authorities are also planning to increase the dive limits for Neopanamax from 44 feet to 45 feet from 15 June. This approaches the limits to the normal level of 50 feet, which is the next step towards full operationality.

The disturbances caused by water scarcity have had a serious impact on planning reliability and spot rates. Although the situation is improving, experts point out that the full restoration of shipping in the Panama Canal depends on one unpredictable factor of rainfall.

Peter Sand warns that companies must be prepared for a slow recovery that can last for years. "Xeneta has long held that the effects of drought in the Panama Canal will be felt for years rather than months," says Sand.

Source: Reuters/MD