Why the Panama Canal is in decline

Climate change is now becoming the captain of international trade. The Panama Canal will not be able to take a number of ships for a while due to a drought. This drought caused by El Niño, the climate catastrophe that is centered around the equator, has made it almost impossible for any large shipments to get through. This drought is one of the worst droughts the country has experienced. So far, only 25 ships are allowed to cross through the canal compared to what would be the original number of 29 ships. In fact, most of the ships traveling through this canal will decline to 18 ships by February of next year. 

Many ports in the U.S. that rely on shipments to come through the Panama Canal are witnessing a record number of delays. Shipping containers that come through the canal are not being seen in the East Coast areas such as New York and Charleston. Many international goods will not make it to the United States on time. The alternative option is to have the goods shipped from Shenzhen, China, all the way to Miami, Florida, through the Suez Canal. However, that trip would take much longer. Wait times for ports on both the Atlantic side and the Pacific will not slow down anytime soon. Droughts have occurred in this region before, but not to the extent where restrictions were put in place and people had to wait a long time for goods. 

In terms of the impact that this drought will have on the global economy, it is very insignificant. Business, as usual, will continue despite the decline in shipping containers. However, many of the individual items that are transported through the canal will be limited, such as coal and agriculture products that superpowers such as China and The U.S. use. Even if the global economy is temporarily shut down, it won’t be a large issue to think about in times ahead. The bigger problem is droughts such as this occurring all over the world. If a drought can happen in the Panama Canal, it can happen anywhere.

Some climate change activists might view the drought and how to navigate around it as a small-scale problem. The real problem that the activists would want people to give some thought is how to mitigate the causes of the drought. The shift to renewable energy seems like the most effective option. The cost of switching from coal energy to renewable energy may present some difficulties for countries that are not ready to make such a big commitment.

For more information about the Panama Canal’s recent drought, check out this video from Yahoo Finance as well as this article from CNBC.

https://www.cnbc.com/2023/11/03/panama-canal-drought-hits-new-crisis-level-amid-severe-el-nino.html