Panama Canal Targets Return to Normalcy by 2025…If Rain Keeps Up

The Panama Canal Authority (ACP) expects conditions in the waterway to fully normalize by 2025 if expected rainfall starting in late April lingers for a few months.

The ACP stated it will gradually ease transit restrictions if current forecasts remain in place.

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“All modifications to restrictions will be contingent on the forecasts,” said the ACP in a Tuesday notice. “If rains are short of expectations, the Canal could retain or apply further restrictions to either daily passage or draft. However, moderate precipitation is expected to arrive later this month and grow in intensity, which would allow the Canal to progressively increase daily slots back to the 36 daily transits typically offered during the rainy season.”

The months-long drought during 2023’s May-to-November rainy season forced the ACP to begin establishing the restrictions starting in July, but it seems the lake that provides the water to move ships through the Panama Canal’s lock system is already showing promising progress.

Official water levels at the manmade Gatún Lake were 80.4 feet deep as of Tuesday, or 2.5 feet shallower than the 82.9 average in April over the five previous years. The 2.5-foot difference is a major improvement from the 5.5-foot average differential just three months ago in January, when water levels were 81.4 feet deep compared to the usual average of 86.9 feet.

There have been various indicators that the peak of the problem has passed, with the ACP already having begun the restriction easing process late last year. The canal went back on initial plans to reduce vessel bookings from 22 to 18 per day, instead opting to increase them to 24 per day.

In March, the ACP added three extra transit slots per day at its Panamax locks, taking the total daily maximum transits from 24 to 27.

Beyond actions taken by the ACP, Maersk said it would reinstate transit on its Oceania-to-the Americas “OC1” service through the Panama Canal starting in May. The container shipping giant first suspended the service in January, instead transporting goods through the country via rail over a land bridge.

The number of vessels waiting to traverse the canal has also leveled out in recent months, with 32 ships in queue that have already been booked, and another 10 that have not reserved a spot yet. Compare that to Nov. 30, when 110 total ships were waiting to wade through, with 51 pre-booked boats in queue and another 59 non-booked ships seeking passage.

“The majority of vessels have reservations and routinely arrive early ahead of their allotted date to transit the Canal,” according to the ACP. “More than three-quarters of vessels outside the Panama Canal today have reservations and therefore will transit the Panama Canal on a predetermined date with minimal to no waiting time.”

The average waiting time for non-booked vessels going northbound is just 0.3 days, while southbound trips are more backlogged at 2.3 days. These numbers have improved since March 14, when the northbound average wait was 2.1 days and the southbound queue was five days.

“The average waiting time for vessels arriving without reservations this year has been just under 2.5 days, far lower than the 3.6 days experienced between January and March last year,” said the ACP in its notice.

During normal conditions, the Panama Canal traditionally has capacity for 34 to 36 daily vessel transits.

The notice was framed as a way for the ACP to dispel myths about the canal’s operations, namely against such claims that ships are still waiting for long periods before they can transit the waterway, and that the restrictions have “caused unreliability and a growing bottleneck.” at the canal.

Another myth the ACP argues against is that the costs to transit the canal are “significantly more expensive than normal.”

“Last year, mainly during the months October and November, there was a surge in auction prices related to a market-driven congestion premium, though this is no longer the case,” said the ACP. “Since the peak period last year, auction prices have leveled off. They are generally near normal levels today, though auctions remain an invaluable tool and option for customers who may otherwise not have secured reservations.”

While 20 daily reservation slots are currently now open for bidding to traverse the Panamax locks, which enable passage of smaller ships up to 966 feet long with a 39.5-foot draft, the canal will scale back the slots again in May for eight days to perform maintenance.

From May 7 to May 14, the number of booking slots for the Panamax locks will be reduced to 17. Once the maintenance is complete, allowing 24 hours for unforeseeable maintenance delays, the 20 slots for the Panamax locks will be reinstated beginning May 16.