The Panama Canal Authority reported that it is lowering the maximum draft for the largest vessels transiting the canal as it works to stay ahead of the intensifying El Niño weather pattern. The move comes as both the US’s National Oceanic and Atmospheric Administration (NOAA) and the World Meteorological Organization have each warned that the current weather pattern is expected to intensify to record levels.
The latest round of restrictions at the Panama Canal is focused on the Neopanamax locks, which are the newer locks created to handle the largest vessels. As such, it will impact containerships as well as the laden LNG carriers and tankers. During the 2023-2024 drought and water restrictions, the authority also imposed restrictions at the locks, which forced many of these vessels to limit their cargoes, or in the case of containerships, they transshipped portions of the load across the isthmus by train.
Effective on August 26, the Panama Canal Authority is lowering the maximum draft for the Neopanamax locks to 48 feet (14.63 meters). A further adjustment is planned for September 3, lowering the maximum draft to 47.5 feet (14.48 meters).
“The measure is based on current water levels and projected conditions for the upcoming weeks in Gatun Lake,” said the authority. It said it is part of its ongoing water management and operational strategy and benefits from the lessons learned during the 2023-2024 period.
NOAA reported in June that the phenomenon was beginning to form. Forecasters predicted a 63 percent chance of sea surface temperatures exceeding 2.0 degrees C in the Niño-monitored region of the Pacific, which they said would be considered a “very strong” El Niño. NOAA reiterated its forecasts on August 6 for the North Atlantic hurricane season, with the only good news that the strong El Niño is likely to result in a 75 percent chance of below-normal hurricane activity, NOAA forecasters predicted.
However, it is also likely to cause significantly lower rainfall in areas, including the Caribbean and Latin America. The Panama Canal Authority reports that currently the water level in Gatun Lake, which supplies the canal, is at just over 84 feet, down nearly a foot since July. Its forecast further expects the lake to fall to approximately 83 feet by September.
Gatun Lake’s lowest five-year average water level was just under 84 feet in May. However, in 2023, during the last significant drought, starting in June and through until October, the lake was measured at just over 79 feet as the authority imposed limits on the number of vessels and their drafts.
The canal authority confirmed that the new steps are the fourth and fifth draft adjustments this year, after it lowered the levels for the Neopanamax locks to 49 feet and then 48.5 feet in July. During the 2023-2024 drought, the levels were cut as low as 43.5 feet.
Critically, it emphasizes that currently, it has not changed the number of daily transits. However, as of late July, it suspended the auction for close-in transit slots. In 2023, the canal cut the number of slots to as low as 22 transits per day from the normal of up to 38 a day.
The concern is that the canal is already seeing increased traffic as U.S. energy exports to Asia rose in response to the closure of the Strait of Hormuz. At the same time, U.S. imports have remained strong. Currently, the canal’s online dashboard shows a total of 70 booked vessels and 35 non-booked vessels waiting for transit, and the average waiting time is increasing. The average is now over six days in both directions, with Neopanamax vessels waiting between two and 11 days. There are currently 15 booked Neopanamax vessels waiting for transit and another 11 without reservations.
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