Panama Canal Pileup due to Drought Conditions

Panama officials enacted water conservation measures in July 2023 in efforts to combat the drought conditions causing major pileup in the Panama Canal global shipping route. Water levels are low, so Panama Canal Authority has reduced the number of ships allowed to pre-book transit through the Panamax locks, and restrictions due to ongoing drought conditions will remain in effect until August 21. Not only are the number of ships reduced, but vessel weight limits are require to safely pass through. Shippers now need to use multiple vessels to move their product. Recently an Evermax vessel was too heavy and was forced to unload 1400 containers at the port of Balboa. The PCA has temporarily lowered the availability of booking slots from August 8-August 21 for Panamax vessels, which are the largest vessels that can cross the canal. These vessels can carry 4,500 twenty-foot equivalent units (TEUs), which are the dimensions of a container. The number of pre-booking slots was reduced to 14 daily from 23.(Source: CNBC)

“We informed our customers that effective August 8, a new Booking Condition, namely Condition 3, came into effect for the utilisation of the Panamax locks. The standard offering of reservations comprises 23 booking slots for these locks. Under Condition 2, in scenarios involving a substantial reduction in capacity (such as lane closures for maintenance), the allocation is reduced to 16 booking slots. Meanwhile, under Condition 3, as currently being implemented, the booking slots are limited to 14 in total (comprising 10 slots for super-sized vessels and 4 slots for regular-sized vessels). To this day, reservations for the Neopanamax locks remain unaffected.”
“This adjustment, effective until August 21, 2023, has been introduced to alleviate congestion for ships already in queue to transit or in route, who were unable to secure reservations beforehand,” said the Panama Canal Authority (ACP) in a statement. (source: Sea Trade Maritime News)

40% of all U.S. container traffic travels through the Panama Canal every year. This will increase shipping cost and time. The congestions is ongoing will drought conditions improve. Despite current limitations and measures taken, demand remains high, hence the increased waiting times.

News

Featured News at a Glance

Tariff Memo from CBP

CBP provided an update regarding Exception to the Reciprocal Tariffs for shipments that loaded on vessel prior to April 5th 12:01am EDT and are in transit. The update states that the exemption will only apply to these shipments if the shipment is arriving AND released BEFORE May 27th, 2025 12:01 EDT.

Read More

Market Update Q2 2025: No.17

Today is "Liberation Day" AKA the day all the tariffs go into effect, even though it's a Wednesday, it is an appropriate day for a market update: Attached is the current tariff announcement in terms of amount by country - any country not mentioned is now a 10% increase, but it is an ever-changing landscape, and we don't have information yet on tariff stacking which is the real question for China and a few others

Read More

Market Update Q1 2025: No.16

March 23 and April 1 increases: For most of March, vessels have not been full and import demand/volume has not been strong for various reasons. Not the least of these are the tariff implications, and I'm sure everyone has heard plenty about them at this point.

Read More

Pegasus to Attend 52nd NCBFAA Annual Conference

Join us at NCBFAA Annual Conference 2025 April 6-9

Read More