Dry Panama Risks Driving Large Oil Tankers Away From Canal

Panama Canal Authority Announced Limits to Daily Traffic
A ship at the Panama Canal
A container ship transits the Panama Canal. (Justin Sullivan/Getty Images via Bloomberg News)

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Dry weather is set to force large oil tankers to completely stop using the Panama Canal, requiring the vessels to extend their voyages by thousands of miles, a shipping researcher said.

The Panama Canal Authority earlier in November announced increasingly drastic cuts to how many ships it will allow through each day. It did so because Gatun Lake, which sits atop the waterway and feeds the locks below, has historically low water levels. By February, daily transit slots could drop to about half the waterway’s normal capacity.

That will make life especially difficult for what are known as tramp ships — that is, vessels that don’t tend to have fixed schedules but instead rely on when cargoes load — Poten & Partners Inc. said in a note on Nov. 3. The Panama Canal is a shortcut between the Atlantic and Pacific oceans and avoiding it means sailing around Africa or the bottom of the Americas instead.

“Large oil tankers will not feature in this trade anymore,” Poten said.

Chart of Gatun Lake water levels

The fact that containerships have more scheduled loading dates will allow them to snap up the canal’s booking slots before tankers can do so, according to the researcher.

They are also unlikely to get transits via auctions that the canal holds for some slots, it added, citing a recent $2.85 million fee recently paid by a very large carrier of liquefied petroleum gas.

Chart of Panama Canal customers

This October was the driest on record in Panama since record keeping began in 1950.

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