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LATIN AMERICA ADVISOR

LATIN AMERICA ADVISOR

A daily publication Of the dialogue

July 5, 2023

What Challenges Are Facing a Drier Panama Canal?

The Panama Canal is experiencing its worst drought in more than a century. // File Photo: Panamanian Government.

Q

  • Normally one of the “world’s wettest countries,” according to The Wall Street Journal, Panama usually does not have trouble meeting the water requirements necessary to move ships through the locks of the Panama Canal. This year, however, in part due to the higher temperatures and lower rainfall associated with El Niño, the canal is currently experiencing its worst drought in more than a century, and it’s causing delays in the movement of goods within the global supply chain and higher fees to transport cargo. What can authorities do to mitigate the problems stemming from decreasing rainfall in the area? How significant are the current delays in moving ships through the Panama Canal, and what problems are they causing for the country’s economy and for global trade?  

A

Joaquín Jácome Diez, partner at Jácome & Jácome: “According to available data from the Panama Canal Authority, the current drought is the worst since 1950. Prior to the ongoing drought, the previous one that affected the canal took place from 2019 to 2020. As the canal administrator notes, these droughts routinely happen every three to five years. These extreme climatic conditions urge the Canal Authority to implement measures in order to optimize the use of water without affecting traffic at the canal. Some of these measures include cross fillings, cross spilling and short chamber lockage in the Panama locks. In the Neopanamax locks, the usage of water-saving basins has been increased. Additionally, there are…”

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The Inter-American Dialogue publishes the Latin America Advisor every business day for a distinguished membership of informed corporate leaders, scholars, and government officials invested in Latin America’s development and future. The Advisor‘s highly regarded Q&A section covers questions submitted by subscribers themselves. Commentators regularly include heads of state, business leaders, diplomats, economists, analysts, and thought leaders from around the world. Many of the world’s largest and fastest-growing companies subscribe to the Advisor. To subscribe, click here. For terms and conditions, click here. For more information, contact Gene Kuleta, editor of the Advisor, at gkuleta@thedialogue.org.
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