The Panama Canal, one of the largest waterways in the world, is the main artery of global trade. Located on the border between North and South America and connecting the Atlantic Ocean with the Pacific, the canal helps shipping companies transport grains, food supplies, and consumer goods to other parts of the world. However, the canal is currently seeing its lowest water levels in history. The extreme drought in the region of the Panama Canal has serious social, economic, and political implications as it stifles exports of grains and other consumer goods, reports Earth.org
According to data from the Smithsonian Tropical Research Institute, the Panama Canal is currently experiencing extreme drought and it is seeing its lowest water levels in history. This leads to repercussions on the transportation and shipping of consumer goods and food supplies across the world.
Experts blame the extreme drought on the El Niño weather pattern. El Niño is a climate phenomenon that causes the Pacific jet stream to move south and spread further east during the winter season, supplying South American regions with heavy rainfall. However, the summer season is also being prolonged. As a result, southern parts of the US, along with Panama and other neighbouring regions, are currently experiencing exceptional drought conditions.
Temperature changes in the region have also caused the water of the Panama Canal to dry up. Temperatures here were slightly above the average in recent weeks, ranging between 85-90F (29-32C).
How Is the Panama Canal Important for World Trade?
The ships travelling through the Panama Canal efficiently transports grains, food supplies and consumer goods to all parts of the world. Serving as a maritime shortcut, its effectiveness lies in its strategic geographic location, which allows ships to transit through the canal instead of navigating all the way to the southern tip of South America.
This crucial artery has several main routes to ensure that consumer goods are being exported to all corners of the world. The US East Coast is connected to Asia as well as the West Coast of South and Central America. Europe and the West coast of Central America are also connected through the canal. The canal also shortens the maritime distance between the North American East and West coasts by 13,000 kilometres (8,078 miles). Its efficient geographical location makes it one of the most frequently used waterways in the world.
The Panama Canal has the ability to save time and distance as it can reduce the sailing distance from the Atlantic to Pacific and vice versa by a vast 8,000 nautical miles. The route of the canal also reduces ship travel time from the Atlantic to the Pacific by about 5 months, its efficiency and time-saving nature make it a crucial resource for the shipping industry, with an estimated 6% of global trade passing through it.
In the fiscal year 2022, the canal registered a total of 14,239 transits, transporting 291 million tons of goods, and paying tolls that totalled US$3,028 million. According to the International Trade Administration, in 2021, the last year for which data is available, revenue from canal tolls amounted to nearly US$3 billion.
Japan, China, and the US are the three largest users of the waterway, with the latter being the leading country out of the three. In the fiscal year 2021, the United States was the origin or destination of 72.5% of all ships crossing the canal. China came in second, with 22.1% of the traffic being ships from China. Japan followed closely with 14.7%.
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Source: Earth.org
