Normal
not getting any better ... from BloombergClimate change could ruin Christmas as Panama Canal dries upThe impact of a record-breaking drought in Panama has spread beyond energy supplies and is now affecting container shipping, a crucial sector of the global freight market that moves everything from campervans to Christmas toys. Sudden downpours in the Central American nation may not be enough to mitigate changes to the way trade operates.Rainfall this wet season – which runs from April to November – has been 41 per cent lower than normal, reducing levels at key reservoirs, including Gatun Lake. The 64-kilometre Panama Canal relies on these water sources to operate a system of locks that allow ships to transit between the Pacific and Atlantic oceans. From 36 crossings per day, capacity has already been cut to 25 and will drop to 18 by February.The possibility of a canal bottleneck turning into the “Pinch that stole Christmas” should be a catalyst for buyers, manufacturers and shipping companies to reassess their whole approach to supply and logistics. Centralising manufacturing and piling products into ever-larger ships makes less sense if transport bottlenecks diminish economies of scale.To allocate slots, the Panama Canal Authority (PCA) auctions off crossings. Japan’s Eneos Group paid $US3.98 million ($6.06 million) in a sale last month, 20 times more than average. Carriers of fuels such as liquefied petroleum gas and liquefied natural gas were hardest hit early on – restrictions started to bite in May – because they don’t have fixed schedules and need to queue up when they arrive at either entrance.As the drought continues, caused by a severe bout of the El Nino effect, container vessels are now starting to be affected.These vessels tend to operate on a fixed timetable so they can book ahead and sail straight through. But even scheduled crossings are being cut.In fact, the impact on container transport has the potential to be much worse, because the majority of these ships are now larger after an upgrade to the canal in 2016 allowed larger carriers to pass through. This NeoPanamax class can hold 2.8 times more containers than the Panamax variety. Crossings for NeoPanamax have been cut by the biggest ratio because of their size
not getting any better ... from Bloomberg
The impact of a record-breaking drought in Panama has spread beyond energy supplies and is now affecting container shipping, a crucial sector of the global freight market that moves everything from campervans to Christmas toys. Sudden downpours in the Central American nation may not be enough to mitigate changes to the way trade operates.
Rainfall this wet season – which runs from April to November – has been 41 per cent lower than normal, reducing levels at key reservoirs, including Gatun Lake. The 64-kilometre Panama Canal relies on these water sources to operate a system of locks that allow ships to transit between the Pacific and Atlantic oceans. From 36 crossings per day, capacity has already been cut to 25 and will drop to 18 by February.
The possibility of a canal bottleneck turning into the “Pinch that stole Christmas” should be a catalyst for buyers, manufacturers and shipping companies to reassess their whole approach to supply and logistics. Centralising manufacturing and piling products into ever-larger ships makes less sense if transport bottlenecks diminish economies of scale.
To allocate slots, the Panama Canal Authority (PCA) auctions off crossings. Japan’s Eneos Group paid $US3.98 million ($6.06 million) in a sale last month, 20 times more than average. Carriers of fuels such as liquefied petroleum gas and liquefied natural gas were hardest hit early on – restrictions started to bite in May – because they don’t have fixed schedules and need to queue up when they arrive at either entrance.
As the drought continues, caused by a severe bout of the El Nino effect, container vessels are now starting to be affected.
These vessels tend to operate on a fixed timetable so they can book ahead and sail straight through. But even scheduled crossings are being cut.
In fact, the impact on container transport has the potential to be much worse, because the majority of these ships are now larger after an upgrade to the canal in 2016 allowed larger carriers to pass through. This NeoPanamax class can hold 2.8 times more containers than the Panamax variety. Crossings for NeoPanamax have been cut by the biggest ratio because of their size
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