As of Aug. 23, 2023, over 200 cargo ships were stuck in the Panama Canal due to traffic limitations imposed by the Panama Canal Authority. The traffic jam is already set to disrupt at least $200 million in profits, a number that is expected to rise.

On Aug. 1, an Ever Max cargo ship trying to get through the Panama Canal was forced to drop hundreds of storage containers due to what authorities say is a historic drought, according to Reuters. Additionally, the outlet predicted further trade disruptions due to extreme weather, caused by higher than average ocean temperatures measured by EU climate scientists.

The reporters mention but do not highlight the fact that the Ever Max cargo ship, owned by Taiwanese shipping company Evergreen Marine, was going to set a record for carrying the most containers ever through the canal. Perhaps that, rather than the drought, is why it had to offload hundreds of containers.

Either way, the Panama Canal Authority instated restrictions on maximum cargo weight for ships in reaction to reports of historic droughts. The restrictions are intended to help “conserve water” for the canal, which permits 80% of global trade to move through its waters. The Authority has also reduced the daily amount of ships allowed to cross the canal.

Now, shipping companies have to decide whether to carry less cargo, change their routes and thus lead to slower shipping rates, or deal with waiting times that reached 21 days earlier in August.

The country of Panama, “fifth-wettest” in the world, is experiencing rainfall deficits that are negatively affecting the canal, according to Reuters. Chief Analyst at freight rate benchmarking firm Xeneta Peter Sand told Reuters that experts are expecting an even drier season in 2024.

EU Copernicus climate map

Average sea surface temperatures across the north Atlantic in June 2023 were 0.91 degrees Celsius higher than the average for 1991-2020, and 0.5 Celsius more than the previous warmest June in 2010, according to the European Union’s (EU) Copernicus Climate Change Service, a non-governmental organization (NGO). The Copernicus Climate Change Service derives its climate research from the World Climate Research Programme (WCRP), which is sponsored by three other NGOs: World Meteorological Organization (WMO), International Science Council (ISC), and IOC-UNESCO, subsidiary of the United Nations (UN). The WCRP also “regularly informs the United Nations Framework Convention on Climate Change (UNFCCC).” 

NGOs affiliated with the EU and the UN are informing discussion on the Panama Canal shut down, and are warning that climate change is to blame for the droughts.

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