Maersk opts for rail solution to combat Panama drought

Reflecting the ongoing water situation in the Panama Canal, Danish carrier Maersk has amended its OC1 service, operating between Oceania and the Americas.

The vessels that utilised the Panama Canal before will now omit the Panama Canal and use a land bridge that utilises rail to transport cargo across the 80 km of Panama to the other side. This creates two separate loops, one Atlantic and one Pacific. Pacific vessels will turn at Balboa, Panama, dropping off cargo heading for Latin America and North America and picking up cargo heading for Australia and New Zealand. Atlantic vessels will turn at Manzanillo, Panama, dropping off cargo heading for Australia and New Zealand and picking up cargo heading for Latin and North America.

For northbound vessels, Maersk stated in an advisory there are no delays to routes stopping in Philadelphia and Charleston, while warning of possible delays for southbound vessels.

The Panama Canal Authority (ACP) increased daily transits to 24 this month following solid amounts of rain over the past seven weeks.   

The measure replaces the previous announcement that forecasted daily transits at 20 slots for January and 18 slots for February.  

Restrictions have been in place for more than six months in response to the challenges posed by the current state of Gatun Lake in the middle of the canal, which is experiencing unusually low water levels. 

Persistent drought has seen the ACP slash the maximum draft on its larger locks as well as cut daily transit numbers by more than 40% sparking an exodus of traffic with many ships opting for longer routes either via the capes or via the Suez Canal, a waterway that has run into its own trouble in the past couple of months with the Houthis in Yemen targeting commercial sea traffic in the southern Red Sea. 

On average over the past seven years typically around 90 ships have to wait to transit the canal at both ends. This figure hit a peak of 163 in August last year and today stands at just 62 ships with much of global trade opting for longer routes elsewhere.

Latest data from the ACP shows the average days in queue of non-booked vessels ready for transit stands at 9.6 days for northbound ships and a lengthy 15.7 days for southbound ships.