February 25, 2024

The Panama Canal Authority is facing restrictions due to an ongoing drought, leading to low water levels and bottlenecks in the canal. As a result, Maersk, one of the world’s largest shipping companies, has decided to turn to rail to move some cargo. The authority understands the need for alternative shipping methods and is working on short- and long-term solutions to mitigate the impact of climate anomalies on the trade route. Maersk’s OC1 service, which connects Australia and New Zealand with the U.S. East Coast via the Panama Canal, will now create two separate loops, one Atlantic and one Pacific. This workaround comes as vessel owners are also rerouting ships to avoid militant attacks disrupting the Suez Canal. The Panama Canal authority has reduced the number of daily crossings from 36 to 24 due to the low levels of water required to push boats through the passage. The authority is committed to finding solutions to these challenges and continues to support its clients’ operations as they adapt to the impacts of climate variations and water shortages. Overall, the Panama Canal is a vital trade route, moving about 5% of the world’s commerce, and any disruptions have significant implications for global trade.

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