London — The Panama Canal Authority has reduced the maximum authorized draft for vessels transiting the Neopanamax locks for the fifth time this year, following a serious drought that has reduced water levels in two of the canal's largest tributary lakes.
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The latest maximum authorized draft is 13.41 meters (44 feet), effective April 30. The previous maximum authorized draft was 13.72 meters (45 feet). When water levels are normal, the maximum draft for Neopanamax vessels is around 15.20 meters (50 feet).
According to Carlos Vargas, vice-president of environment and water for the PCA, Gatun -- the largest tributary lake to the canal -- was 1.40 meters below normal April/May levels and has dropped more than 0.2 meters since early April. The smaller lake Alajuela was 2.20 meters (7.20 feet) below usual levels.
"These low levels in the Panama Canal are the product of four or five months of almost zero precipitation," Vargas said in an interview with the Associated Press. "It has been the driest season we've had in the history of the canal. The flow of rivers to the lake is down 60%."
IMPACT ON SHIPPING
The imposed draft restrictions are likely to reduce canal traffic significantly, and dry bulk ship operators reported an uptick in fronthaul voyages from the US Gulf Coast heading East via the Cape of Good Hope instead. The New Orleans to Fangcheng, 66,000 mt grains route was assessed unchanged on the day Wednesday at $42.75/mt -- the highest rate so far in 2019.
On container ships, the market underwent a stronger General Rate Increase (GRI) at the start of May from PCR5 North Asia to East Coast North America, than on PCR13 North Asia to West Coast North America.
PCR5 rose to $2,700/FEU from $2,475/FEU at the end of April, with tighter capacity and increased demand adding fuel to the fire along these lanes. PCR13 rose $25 to $1,500/FEU Wednesday.
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