Drought-stricken shipping restrictions and record freight rates in the Panama Canal are forcing bulk grain shippers of North American crops to shift from the Gulf Coast to Asia on longer routes, with higher shipping costs, to avoid delays at one of the world's top destinations. Reuters quoted businessmen and industry analysts as saying that the maritime route.
The highest costs occur during peak shipments to U.S. corn and soybean merchants. Ships carrying crops need to wait up to three weeks to cross the canal, as container ships and other vessels that sail regularly are taking up the few available transit slots.
The Panama Canal Authority (PCA) is limiting the number of daily vessel crossings due to the unprecedentedly low water level in Lake Gatun, as a severe drought has cut off the water supply needed for the operation of its lock system. The PCA will limit daily traffic starting December 22, January 20, and February 18. Under normal circumstances, about 35 crossings per day are allowed.
Analysts say the restrictions could continue to hamper grain shipments until 2024, when the region's rainy season could begin to replenish reservoirs and normalize shipments in April or May.
Options for grain carriers include sailing south through South America or Africa, or using the Suez Canal. However, these longer routes can extend transit times by up to two weeks, increasing fuel, crew, and freight charter costs.