Panama Canal to further reduce daily transits if drought continues

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By Marianna Parraga

(Reuters) -The Panama Canal could further reduce the maximum number of vessel transits authorized per day if a drought that has hit the waterway this year continues, its administrator said on Tuesday.

The canal began restricting vessel draft and authorized daily passage earlier this year to conserve water, which has triggered a backlog of ships waiting to pass the key global trans-oceanic way, which handles an estimated 5% of world trade.

The measures have forced many vessels to lighten cargoes before passing, and contributed to more expensive freight costs ahead of the approaching Christmas season.

Up to 32 ships are currently authorized to transit every day, from 36 ships in normal conditions. Vessel draft was also limited earlier this year to a maximum of 44 feet, from 50 feet.

In a move to ease the bottleneck of ships waiting, the canal has recently changed its reservation system to allow more non-booked vessels to pass and to give priority to the ships waiting the longest.

As of Tuesday, a total of 116 vessels were waiting to pass in Panama, compared with more than 160 in early August, according to official data. The maximum wait time had also reduced to 14 days, Vasquez said, from 21 days a month ago.

The head of the Panama Canal Authority, Ricaurte Vasquez, said the waterway would opt for reducing daily transits if needed, before planning any further cut to authorized vessel draft, which affects shippers the most.

«This (El Niño) phenomenon has been very severe this year. We have hot temperatures in the Pacific and the Atlantic simultaneously,» Vasquez told journalists in a briefing. «We anticipate that in the upcoming months, in the absence of significant rain, we'll have to be prepared.»