July 23, 2024

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The Panama Canal is enmeshed in a crisis that’s disrupting global trade. But it will take years and billions of dollars to fix

2 min read

The vestiges of an ancient forest tell the story of just how bad things are at the drought-stricken Panama Canal.

A few hundred feet from the massive tankers hauling goods across the globe, gaunt tree stumps rise above the waterline. They’re all that remains of a woodland flooded more than a century ago to create the canal. It’s not unusual to see them at the height of the dry season — but now, in the immediate aftermath of what’s usually the rainy period, they should be fully submerged.

They’re a visible reminder of how parched conditions have crippled a waterway that handles $270 billion a year in global trade. And there are no easy solutions. The Panama Canal Authority is weighing potential fixes that include an artificial lake to pump water into the canal and cloud seeding to boost rainfall, but both options would take years to implement, if they’re even feasible.

With water levels languishing at six feet (1.8 meters) below normal, the canal authority capped the number of vessels that can cross. The limits imposed late last year were the strictest since 1989, when the conduit was shut as the US invaded Panama to extract its de facto ruler, Manuel Noriega. Some shippers are paying millions of dollars to jump the growing queue, while others are taking longer, costlier routes around Africa or South America.

The constraints have since eased slightly due to a rainier-than-expected November, but at 24 ships a day, the maximum is still well below the pre-drought daily capacity of about 38. As the dry season takes hold, the bottleneck is poised to worsen again.  

“As a canal, as a country, we need to take some measures because it isn’t acceptable,” Erick Córdoba, the manager of the water division at the canal authority, said in an interview. “We need to calibrate the system again.”

The canal’s travails reflect how climate change is altering global trade flows. Drought created chokepoints last year on the…

Peter Millard, Michael D. McDonald, Bloomberg

2024-01-02 19:39:12

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