Panama Canal Reduced Capacity Since Drought

May 24, 2023

A severe drought has led to the Panama Canal Authority (ACP) reducing the capacity on larger vessels that traverse the canal.

With this reduction, carriers have to lighten the loads on vessels. This effectively impacts Asia to US East Coast loops, along with North and South American West Coast services to Europe.

Some carriers have already reacted to the capacity limitations by implementing a PCC (Panama Canal Charge) of $500 per container, which we understand will be effective from June on certain trade lanes.

The Panama Canal is the only crossing point for cargo ships moving between the Atlantic and Pacific Oceans, without travelling North or South of the continent.

This year’s drought season has hit the region hard and diminished the water supply to the canal. Two lakes, set around 25 metres above sea level, rely on rainwater to operate the canal, which have dropped significantly in recent weeks.

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