New Drought Restrictions Threaten Future of U.S. Shipping Through Panama Canal

In an effort to conserve water, the Panama Canal Authority (PCA) has announced it will be reducing the number of daily transits allowed to pass through its “Panamax” locks.

The PCA’s Panamax locks lose more water per crossing than its “Neo-Panamax” locks because they do not have the water-recapturing ability of the Neo-Panamax locks. According to the PCA, it takes approximately 50 million gallons of fresh water to move a vessel through one of the locks.

Though the new restrictions have yet to be implemented, they could have a direct impact on the U.S. shipping industry, as it will make it more costly for shippers to move containerized goods, affecting many key sectors of the U.S. economy, including agriculture, energy and retail.

Ricaurte Vásquez Morales, administrator of the Panama Canal Administrator, said, “The U.S. is the main the main source and destination of our traffic… When you combine all of the commodities and containers to the U.S. it represents about 73% of our traffic.”