Climate change and The Panama Problem
By Samarth Singh
Usually, people think of a traffic jam as a lot of cars stuck on a road. As it turns out, sometimes, there are traffic jams in the sea as well…
A live example of it would be the Panama Canal. Each year, 270 billion dollars worth of goods pass through the canal, but right now, more than 200 ships are stuck on either side of the Panama Canal, damaging global trade. This has slowed consumer goods deliveries and is a matter of concern for the holiday inventory.
It isn’t the first time this is happening. In fact, it’s becoming much more common. In 2021, a huge ship, The Ever Given ship, got stuck in the Suez Canal for six days, resulting in a loss of over 54 billion dollars. In 2022, the Ever Forward got stuck in the Chesapeake Bay. 2023 seemed like a perfect year for the shipping industry, but it turns out that’s not the case.
The traffic jam in Panama isn’t caused by a ship getting stuck, but rather climate change. The Panama Canal works a little differently from other canals. The level of water is constantly increased and decreased inside lock chambers, allowing ships to eventually pass through. However, the Canal is drying up. Rainfall measurements are 30-50% below normal. Water levels in the Gatun Lake, which feeds the canal were down by 2 meters. This is one of the driest years in the country’s history (temperatures have been recorded for 143 years).
This has resulted in several problems. The number of booking slots for large ships has reduced by 64%. Some ships have been delayed by 21 Days. The average number of ships passing through the canal is down by over 10%. There are about 50 more vessels waiting near the canal. Restrictions over the depth of vessels have also been imposed.
What does this mean? Delayed consumer deliveries and possible price hikes.
This, apart from a financial nightmare, is also a signal towards a larger problem. Climate change is taking a much more dangerous form. The world is facing its effects, not only physically, but financially as well.
Sources:
Telling, Oliver, and Christine Murray. “Severe Drought in Panama Hits Global Shipping Industry.” Financial Times, August 14, 2023. https://www.ft.com/content/86839bc7-1926-4bf6-b593-1720f7fbd8b4
Partridge, Joanna. “Long Delays at Panama Canal after Drought Hits Global Shipping Route.” The Guardian, August 15, 2023. https://www.theguardian.com/business/2023/aug/14/drought-causes-queues-and-delays-for-ships-passing-through-panama-canal
Baertlein, Lisa, and Marianna Parraga. “Focus: Historic Drought, Hot Seas Slow Panama Canal Shipping.” Reuters, August 21, 2023. https://www.reuters.com/business/environment/historic-drought-hot-seas-slow-panama-canal-shipping-2023-08-21/
Cohen, Rebecca. “More than 200 Ships Are in a Traffic Jam Outside the Panama Canal, Showing We Can’t Get through a Year without Big Boats Getting Stuck.” Business Insider, August 23, 2023. https://www.businessinsider.com/traffic-jam-outside-panama-canal-hundreds-ships-2023-8
Russon, By Mary-Ann. “The Cost of the Suez Canal Blockage.” BBC News, March 29, 2021. https://www.bbc.com/news/business-56559073
Bray, Wayne D., Norman J. Padelford, William E. Worthington, Burton L. Gordon, and Aileen Cho. “Panama Canal | Definition, History, Treaty, Map, Locks, & Facts.” Encyclopedia Britannica, September 18, 2023. https://www.britannica.com/topic/Panama-Canal
