The shipping industry appears to be beginning to take alternative routes to avoid the ongoing restrictions at the Panama Canal as the region continues to suffer from its greatest drought in 70 years.
Reports have emerged of numerous shipping companies choosing to find a different way of moving their ships after the Panama Canal Authority (ACP) announced further restrictions to movement through the major shipping lane, allowing just 25 booking slots per day and planning to reduce this further to 18 in February 2024.
Analysis by contain booking platform Freightos found that carriers have also begun introducing surcharges for containers looking to travel through the canal.
It said: “Two more carriers announced upcoming surcharges for containers transiting the canal due to climbing operational costs, and in addition to a handful of vessels that have already taken alternate routes, THE Alliance announced that three Asia – East Coast services will start rerouting via the Suez canal.”
THE Alliance carriers such as Yang Ming and Hapag-Lloyd have announced alternative routes for some of their services, while vessels like Liberian flagged Green Sky have headed down the Strait of Magellan instead of attempting to traverse the canal.
Analysis by shipping investment advisor Braemar found that only 95 transits were completed by Bulkers through the canal in November, a 60% drop on the 232 recorded during the same period in 2022.
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Large backlogs of ships have begun waiting by the canal since a state of environmental emergency was declared by the Government of Panama in May, with the ACP warning in August that it was expecting restrictions to stay in place for at least 10 months from then.
Though the ACP has been taking steps to try and minimise the issue, it has also reported rain levels 41% below expectations for October and is expecting 2023 to be the second driest year on record.