The Panama Canal Authority (ACP) is forecasting a revenue shortfall of between $600 to $800 million. This troubling prediction stems from ongoing drought conditions, restrictions on ship size, and a decrease in daily canal transits.
Queue-jumping auctions have reached prices of $4 million, while logistics firms like Maersk have established a land bridge to link Atlantic and Pacific ports in Panama. ACP administrator Ricaurte Vásquez states, “toll revenues have been $100 million below each of the first three months of operation: October, November, and December.” If this trend persists, losses could amount to approximately $800 million.
Meanwhile, the Suez Canal is operating at just 63% of its 2023 capacity due to ongoing conflict in Yemen. This, coupled with skyrocketing prices for non-bulk carriers, could drive up the cost of goods and raw materials, potentially impacting inflation.
The Panama Canal's troubles began in 2023 with the El Niño phenomenon, which made October the driest month in the canal basin's recorded history. Despite a $500 million investment to secure water supplies, the canal's future capacity remains uncertain. Auctions for passage spots have helped offset revenue losses and are projected to bring in $200 to $300 million. However, as Vásquez notes, auctions only work when ships transit the canal.
Source: gfmag.com