Reuters/ARIS MARTINEZ
- The Panama Canal Authority has further restricted the number of boats that can cross per day.
- The crucial junction relies on freshwater, which has been in short supply after an intense drought.
- Traffic restrictions in August caused a backlog of hundreds of ships waiting to cross.
The Panama Canal Authority further reduced the number of boats that can transit through the strategic waterway, which has been hit by an intense drought.
Only 31 ships will be allowed through the canal per day from November 1, down from circa 36 to 38 daily ship crossings during normal operations.
The announcement was a further cut from the earlier figure of 32, imposed in August. That restriction caused a backlog of hundreds of vessels waiting to cross the canal. Ships that usually crossed the canal in two-and-a-half days had to wait more than nine to make the journey, Insider previously reported.
The situation has become so dire that some shipping firms have paid millions of dollars to buy an earlier place in line.
The CEO of the gas-shipping company Avance Gas said during the company's second-quarter earnings call in September that it had put up $2.4 million to win an auction held by the canal authorities to cut the line.
The canal authority reported that traffic had returned to normal by early September. As of October 2, there were about 95 boats waiting to cross the canal,
However, analysts at Project44, a supply chain platform, previously told Insider the upcoming holiday season could add further strain on the popular shipping route.
Unlike the Suez Canal, which relies on seawater, the Panama Canal uses freshwater from an artificial lake to supply its waterway. But after an unusually dry year, the watershed of rivers and brooks that usually feed into the lake has been particularly meager, leaving Lake Gatun with about 80 feet of water. It would usually have about 87.
Because of this, the canal authority has had to ration the transit through the Panama Canal locks, per the AP.
Ricaurte Vásquez Morales, the administrator of the canal, previously predicted the canal's income could fall by as much as $200 million next year because of the reduced traffic.
He told French international news outlet France 24 that the El Niño climate pattern could worsen the situation further.
"We have to find other solutions to remain a relevant route for international trade. If we don't adapt, we are going to die," Vásquez told France24.