AMN/ WEB DESK
Due to a severe drought since last year, ship crossings through the vital oil choke point Panama Canal have been cut by 36 percent. This reduction, announced by Panamanian authorities, is expected to have a more substantial economic impact than initially thought. Panama Canal Administrator Ricaurte Vásquez now estimates that dipping water levels could cost them between Dollar 500 million and Dollar 700 million in 2024, compared to previous estimates of Dollar 200 million.
One of the most severe droughts to ever hit the Central American nation has stirred chaos in the 80-kilometer maritime route, causing a traffic jam of vessels, casting doubts on the canal’s reliability for international shipping and raising concerns about its effect on global trade.
The disruption of the major trade route between Asia and the United States comes at a precarious time. Attacks on commercial ships in the Red Sea by Yemen’s Houthi rebels have rerouted vessels away from the crucial corridor for consumer goods and energy supplies.
The combination is having far-reaching effects on global trade by delaying shipments and raising transport costs. Canal authorities attributed the drought to the El Niño weather phenomenon and climate change, and warned it was urgent for Panama to seek new water sources for both the canal’s operations and human consumption. The same lakes that fill the canal also provide water for more than 50 percent of the country of more than 4 million people.