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Panama Canal: It never pours but it rains

Transit numbers for the key waterway were up a little last month. But the climate change-driven declines in water levels are not going away any time soon

Reduced capacity could soon be the new normal for at least three years in every decade

THE humid tropical climate of Panama normally makes it one of the wettest countries in the world. That a lack of water has become an acute problem for the central American country is a marker of the real impact climate change is having on our planet.

Droughts now occur in one year in every three, and 2023 was Panama’s driest 12-month period since 1950. Rainfall last October was 40% below the historic average for that month.

When the mainstay of your entire country’s economy is a human-built waterway that connects the Atlantic to the Pacific, these developments are seriously bad news.

The Panama Canal’s lock system needs to be able to lift large vessels 26 metres above sea level and relies on rainfall to be able to do so. But the imperative of making sure the populace gets clean drinking water trumps even that consideration.

The Panama Canal Authority (ACP) had no choice but to restrict transits, with the pain immediately felt by our industry. The cost of buying a transit slot at auction more than doubled; owners who couldn’t or wouldn’t shell out that kind of cash have been forced to seek alternative routes, lengthening journey times and pushing up costs.

Luckily there has been been a degree of short-term respite, after welcome recent precipitation. To invert an old proverb, these days it never pours. But sometimes it does rain.

Three weeks ago, the ACP was able to add three slots a day through its panamax locks, and Maersk reinstated a service it had previously switched to rail transits across the isthmus.

Lloyd’s List this week crunched the numbers. Transits in March were up 12.8% during February, the first sequential gain since last July, numbering some 747 vessels. But even that is low for this time of year.

The traditional rainy season is due to start in late April and run until next January, with the ACP keeping its fingers crossed for a return to normal in the coming months.

Speaking at the Connecticut Maritime Association conference in the US a few weeks back, ACP deputy administrator Ilya Espino de Marotta expressed confidence in prospects for a gradual recovery. 

“We won’t go back to 36 or 38 [transits], but we definitely are hoping to go at least 34 by the end of May,” she said. With any luck, the canal could even be back to full capacity by September.

The ACP is also doing what it can on the engineering front, with several smaller projects designed to stabilise reservoir water levels already underway. In the medium term, there are proposals to construct a new dam and an additional lake. If that happens, it will enable up to 15 additional passings per day, taking the maximum to somewhere around 50.

But the big picture remains far from certain, and current trends in the fight against global warming give few grounds for optimism.

Under the terms of the Paris Agreement, to which 196 countries signed up nine years ago, the international community agreed to limit temperature increase to 1.5 degrees Celsius above pre-industrial levels. Since then, they have continued to rise.

Accordingly, 2023 was the hottest year on record, and the Met Office in the UK projects that 2024 could see the 1.5-degree yardstick exceeded. The chances that the Paris threshold will be a dead letter by end of the decade are roughly 50/50, and that estimate is conservative rather than alarmist.

Certain shipowners — particularly those with large fleets of tankers — remain contrarian sceptics. Some will no doubt argue that Panama’s travails are largely the result of the El Niño weather phenomenon and point out that there is extensive natural variation in global average temperatures, and not a lot humanity can do about it.

But the contribution of greenhouse gases to global warming is now beyond any scientific doubt. The state of the canal illustrates exactly why complacent “do nothingism” cannot prevail.

The International Maritime Organization’s non-binding “ambition” to achieve net zero greenhouse gas emissions from shipping “by or around ie close to” 2050, by way of two indicative checkpoints, is a big step forward from its earlier goals, which were effectively nugatory.

But there is a fair degree of doubt as to whether the target will be met. In a poll of Lloyd’s List seminar attendees last December, only a relatively slim majority — 56%, to be exact — expressed confidence that shipping would hit net zero by mid-century.

Similarly, Maersk deserves kudos for its determination to explore alternative fuels. But few smaller shipowners have deep enough pockets to emulate the Danish logistics giant’s example.

Shipping as industry is responsible for around 3% of greenhouse gas emissions. It needs to pull its weight, and could and should be doing more. But while 3% is big enough to give it an important role in the fight, it is not quantitively sufficient to be decisive.

The world will need to work together to tackle one of the defining issues of our times. The potential new normal at the Panama Canal is a worrying portent of what will happen if it doesn’t.

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