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Carual
CopesWith
Drought
Continued frompage 81
are routinely shipped across
the canal, along with copper
from Chile and liquefied natu-
ral gas from the U.S. Gulf
Coast. The isthmus connects
the Atlantic and Pacific
oceans and handles about
one-third of Asia-to-Americas
seaborne trade.
Any issues also could up-
end the Panama Canal Au-
thority's effort to boost busi-
ness. It spent $5.4 billion for
a new set of locks that ac-
commodate larger container-
ships, aiming to be more
competitive with Eg;ypt's Suez
Canal. Routes through the
Panama Canal shorten the
one-way trip by sea from Asia
to the U.S. East
Coast by
roughly five
days. Accumulatgd
The canal fainfall in the
in
hauls more
money from area around
Iarger ships
Canal iS 47o/o
crossing the
newer locks, betow
which are now
responsible for
about half of
its business. About 10 ships a
day move through the newer
Iocks, and about 27 smaller
vessels travel through the
older locks.
"The rainfall volume has
been consistently falling over
the past 20 years," said
Ricaurte Vdsquez Morales,
the Panama Canal Authority
administrator. "We are deal-
ing with a climate crisis when
we are at peak capacity, and
we have to find new sources
of water to store in our
lakes."
The Panama Canal is the
country's biggest foreign-rev-
enue generator, responsible
for more than $3 billion from
tolls last year.
In addition to cutting
cargo loads, shipowners are
adjusting to Panama Canal re-
strictions by moving contain-
ers to trains to ensure safe
passage through locks. In
some instances boxes are un-
Ioaded from ships on the Pa-
cific Ocean side of the canal,
moved by rail and returned to
ships before they continue
their voyage through the At-
lantic Ocean.
The Panama Canal Raiiway
has had a 20% increase in vol-
ume in recent weeks from
carriers affected by the
drought, said Thomas Kenna,
president of the railway.
Carrying larger amounts of
cargo can help improve the
economics of operating along
shipping routes. The ship op-
erators will likely reroute to drought conditions persist.
avoid the canal if they face "The low water levels at
prospects of carrying fewer the Panama Canal are a clear
boxes in the summer, indus- example of the effects of cli-
try executives and analysts mate change, which causes a
said. ripple effect through the sup-
' "If the canal ply chain," said a spokes-
is seen as hav- woman for Maersk, the
ing Iimitations, world's second-biggest liner
it's not good in terms of capacity.
Vdsquez Morales said ex-
the fil -:H::X',a. treme rain or drought condi-
"The cargo will tions are more frequent oc-
currences than in the canal's
averase. *N3'.1i13':l: earlier years of operation.
way." That issue presents a chal-
Shipowners lenge for the Panama Canal
are also re- Authority, which supplies wa-
sponding by charging custom- ter to about 2.5 million peo-
ers an average $600 more a ple, or about half of the coun-
box on vessels crossing the try's population.
canal. The daily freight rate The canal has hired the
from Asia to the U.S. East U.S. Army Corps of Engi-
Coast was $2,400 a container neers, the original canal
in May, according to the builder, and earmarked $2
Freightos Baltic Index, but it billion over the next 10 years
is expected to rise in June, in to divert as many as four riv-
part, because of the Panama ers into the waterway in ad-
Canal drought surcharge. dition to the three that al-
For now, A.P. Moller- ready feed it.
Maersk and other liners such "We would have done the
as Germany's Hapag-Lloyd same over a 25-year period if
and China's Cosco Group the weather stayed normal,
have no plans to divert ships but now it has to be done in
away from Panama, but exec- 10 years," Vdsquez Morales
utives said it could happen if said.
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