Panama Canal faces worst drought on record which may affect UK Christmas sales

06 December 2023 , 20:18

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Low water levels outside the Miraflores locks of the Panama Canal (Image: Bloomberg via Getty Images)

The Panama Canal – one of the world’s most important trade routes – is experiencing the worst drought on record.

Delays are running up to four weeks as water levels continue to fall in the channel that connects the Atlantic and Pacific Oceans, making it more difficult for large container ships to pass through. The congestion could have a ripple effect across the worldwide supply chain – and may even affect Christmas in the UK, experts say.

Grains and fuels are also among major products moved through the canal, meaning it could lead to food and energy costs rising. Before problems began, 38 ships passed through the canal each day.

Cargo ships wait in the anchor zone in September (Bloomberg via Getty Images)

But with less water to maintain the freshwater lock system, just 24 have been allowed to pass through daily since November 7. Numbers are expected to fall to 16. Some ships are taking months-long detours through the Suez Canal in Egypt. The drought, which has happened at a temperature rise of 1.2C, is being highlighted at COP28.

Discussions are going into the second week, with delegates drafting an agreement for action to keep global warming at 1.5C. It is not just the Panama Canal that is suffering. Last year, a record drought in the Rhine region derailed European trade.

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Earlier this year, water levels in the Mississippi hit an all-time low. Storms have triggered a wave of port closures across China. Wild weather in Brazil has triggered the collapse of a port on the Amazon.

Steven Paton, director of the Physical Monitoring Program at the Smithsonian Tropical Research Institute in Panama, said water levels are the lowest seen at this time of year in 98 years of data. He said: “This is now our third extreme water deficit in the past 25 years. That is a huge red flag.”

The region has had eight of the 10 biggest storms in its history over the past quarter century. The drought could make goods sent from the US west coast to the UK, especially tech items such as iPhones, harder to obtain.

David Jinks, head of consumer research at delivery firm ParcelHero, said: “The result could be shortages of goods and increased prices. There will be a significant impact on a range of products typically carried on the canal in containers, including TVs, mobile phones, exercise bikes, PCs, Christmas sweaters and tree lights.”

Nada Farhoud in Dubai