Wedel, January 30, 2024
The Panama Canal, a core element of the global supply chain infrastructure, is facing considerable difficulties due to unusually low water levels. The effects are expected to have far-reaching consequences for the logistics industry and international trade as early as March. Experts from the ESSC recently presented a quantitative analysis showing the consequences of the current El Niño event for the Panama Canal. Current water levels are already at seasonal lows, with negative effects on the canal’s capacity and corresponding waiting times. “The historically low water levels are partly due to decades of deforestation in the rainforest surrounding Lake Gatún, which is the main source of water for the canal,” says Bodo Frommelt, a forestry graduate. “Reforestation has taken place. However, due to the significantly lower ability of this secondary forest to store water, the water supply has repeatedly been reduced in recent years during the dry season that begins in January,” Frommelt continues.
Medium-term scenarios from the ESSC show that critically low water levels in Lake Gatún are likely from March 2024 and could significantly impair the smooth operation of the canal. For mid-May, this probability is over 70%. A delayed onset of the rainy season could also significantly exacerbate the situation. “It is beneficial to see the different issues that can be addressed with our analytical methods and how we play an important role here,” says Stefan Berg, ESSC Executive Board member with many years of experience at multinational companies. “These forecasts raise the question of how well companies that are supplied directly or indirectly through the channel are prepared for potential bottlenecks and whether sufficient work is being done on alternative plans,” says Frommelt. The need for forecasting will certainly continue to increase in the coming years.
