Pinkerton Insights Podcast

The Panama Canal is operating with draft restrictions due to a severe drought related to El Niño last week. The last five months have been the driest dry season in the history of the canal. Water levels on Gatun Lake and in the New Panamax locks are dropping. Since April, vessels transiting the New Panamax locks are restricted to drafts less than 44 feet. A further restriction of the maximum drafts to less than 43 feet was to go into effect, but it has been postponed. To comply with the draft restrictions, carriers have reduced their cargo stowage. We asses that regular cargo shipments that transit the Panama Canal are likely to be further delayed as Panamax and New Panamax ships will have to transit the canal with smaller cargo loads. Unless the region receives significant rainfall that would recharge the water levels in the next month or two, it is highly likely that carriers will have to restrict or roll bookings to meet the maximum draft requirements. As the current draft restriction is the fifth