Posts Tagged “drought”
The Panama Canal Authority recently warned water-conserving measures will be in place for at least the next 10 months. As a result, global shipping companies have been urged to share transit plans at one of the world’s key maritime chokepoints.
An unprecedented drought this year, combined with the onset of the El Niño weather phenomenon, has resulted in a cut of draft restrictions for ships coming through its larger neopanamax locks by six feet. Transits also have been slashed by 20% to only 32 vessels a day.
These measures have resulted in ships backing up in significant numbers at either end of the canal. The Aug. 25 official total count was 129 ships, down from the peak of 165 earlier that month, but still 43% higher than the average.
The Panama Canal Authority has noted the restrictions would remain in place at least throughout the first half of 2024.
Container services and cruise itineraries tend to transit the canal with long advanced bookings. For bulk sectors, it is more ad hoc and with shorter notice, and it has been here the impact has been greater, where it might not be possible to obtain an advanced booking and therefore joining the queue is necessary.
The limits on transits have caused a vessel pile-up. According to some reports, there were recently 200 queuing, with wait times of up to 21 days.
While there are complex options, it’s noted ships greater than 12,000 TEUs, may choose to re-route through Suez. TEU is the industry term for a 20-foot equivalent unit.
For smaller containerships, which can still pass fully laden, a backhaul return to Asia via the Suez or the Cape with a slightly longer distance and time is another option liners will be looking at to reduce overall Panama demand while also soaking up capacity at a time where container fortunes are widely perceived to be on the wane through to at least the end of next year.
There has already been one cruise ship cancel its winter Panama season. Container carriers switching routes will be watched carefully by other sectors keen to get prized slots through the waterway in the coming months.
Some observers and logistics providers have warned goods needed for the Christmas shopping season might arrive late. Goods worth $270 billion – about 73% of the canal’s annual volume – are headed for the U.S. market, according to the CPA.
The travails at the canal are not having a notable lifting effect on container spot rates in the past two weeks. Drewry’s weekly World Container Index, published Aug. 27, showed rates from Shanghai to New York were down by $120 per feu (forty-foot equivalent unit).
The longer the situation persists the bigger the chances are of further freight rate increases and the likelihood that shippers will begin to divert cargo back to the US west coast ports and use rail to bring the cargo to its final destination.
In light of the ongoing dry season and its prolonged effects, the Panama Canal has informed its customers that it will maintain a draft of 44 feet for the next few months.
The measure will be in place for “as long as weather conditions do not vary significantly from our current projections,” the Panama Canal Authority says in a recent release.
This comes as the canal seeks to continue providing reliable and sustainable service for its clients.
An average of 32 vessels per day will be allowed transit with this temporary condition, as changes in precipitation patterns are expected to affect water availability in Panama.
Drought conditions in the canal are part of a global phenomenon, with the World Meteorological Organization warning about a high probability of El Niño setting in before the end of this calendar year.
The Canal has been implementing procedures to improve water efficiency in its operations, while conducting studies to identify long-term solutions to climate variability. However, the severity of the drought, coupled with its recurrence is historically unprecedented.
The Panama Canal remains committed to ensuring safe and reliable operations in the short term and optimal services for years to come.
Panama Canal water levels have decreased due to severe drought, forcing vessels to lighten their loads and pay higher rates.
A restriction in weight is occurring at one of the world’s most important shipping routes from May 24, followed by another decrease on May 29.
The Panama Canal Authority (ACP) reports the maximum draft allowed for vessels transiting the Canal from May 24 would be reduced to 13.56m or 44.5 ft.
Effective May 30, the maximum draft allowed for vessels dropped to 44 ft, the authority noted.
The canal is supplied by two nearby lakes which received 50% less rain than usual between February and April. Lack of rain is threatening to bring levels to historical lows in July.
Experts have warned new restrictions will likely cause delays and freight cost increases as the Panama string capacities are reduced.
Hapag Lloyd already announced a PCC (Panama Canal Charge) of $500 per container effective June 1 on all cargo loaded on its Asia to US east coast sailings via the canal.
The canal, which manages around 5% of annual global maritime trade, has been struggling with drought ever since it expanded in 2016 to allow larger ships to pass through its locks.
By Milagros Aredo, ALC San Francisco
Seasonal droughts in California have become more frequent and severe in recent years. However, what California is experiencing right now has everyone who is involved in agriculture concerned. California is the largest grower of US fresh produce.
There are over 69,000 California farms and ranches that are being affected that supply over a third of U.S. vegetables and two-thirds of its fruits. To keep up with demand, these farmers rely heavily on their regional water availability which is a huge challenge today. In the farming valleys of California, an ongoing drought is impacting both the production and price of the crops. With scarce water, farmers are being forced to rip out their trees and produce early because of drylands and high temperatures. This is a tough business decision for them because it affects their seasonal production and becomes more costly to replant and regrow.
For example, California almonds harvesting accounts for about 80% of global production. Almonds require more water to thrive on and if they lack moisture a 25-year investment can be ripped from the ground. To keep their farms from ruins, growers are searching more for underground water resources.
They are drilling depths of 1000 feet for water to sustain thirsty citrus, fruits, and pistachios which adds costs and takes away farmland from production. They’re also exploring other possibilities such as dry-farming techniques that rely less on water. Farmers are stuck between scaling back and prioritizing growing low value vs high-value crops and how much of them should be planted.
To produce as much as possible, farmers are planting crops closer together in an attempt to make the root structure denser and keep moisture in the soil. They also focus on crops that require less water. Tree crops like avocados that are highly water-intensive have gone up by 10% in retail price from last year. The water crisis is causing a short food supply in retail.
Certain commodities at grocery stores are lightly stocked to empty and shoppers are seeing inflation on prices because of this. Vendors are shifting where they grow and sell things to help increase production to keep the commodities affordable and readily available. Having no control over the weather, growers will need to continue to find more ways to adapt and find supplemental water in order to supply 400 key commodities to millions of Americans.
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Milagros Aredo is a senior transportation broker with ALC San Francisco, CA. Milagros has six years of experience in logistics and graduated with a double major in International Business and Marketing from USF.
New Yorkers could be forking over more green for their summer fruits and 
salads — as record-breaking heat waves and droughts shrivel crops across the nation, sending prices soaring.
Dozens of field-picked vegetables and fruits got baked out of business in the past three weeks, causing overnight shortages at Hunts Point in The Bronx, the world’s largest produce marketplace.
Fresh-picked cucumbers, for example, have soared 57 percent at the wholesale level since the start of July.
Boston lettuce has skyrocketed 80 percent, while blueberries are up 69 percent.
“Wholesale prices for certain field crops are becoming a lot higher than expected,” said Terry Long, an analyst at the US Department of Agriculture.
To read the rest of the story, please go to: New York Post
By Paul Tharp