Today, Explained
The Panama Canal is drying up
Feb 20, 2024
Mie Dahl, a freelance reporter focusing on the Panama Canal, and Sharat Ganapati, an assistant professor of international economics, discuss the severe drought impacting the canal's shipping capacity. They unpack the cascading effects on global trade, emphasizing rising costs and delivery delays for US-bound goods. Climate change's role in this crisis is also examined, alongside potential solutions for water management. The conversation reveals how geopolitical tensions further complicate global shipping routes, highlighting the urgent need for infrastructure improvements.
25:39
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Quick takeaways
- The Panama Canal is experiencing reduced capacity and increased costs due to a severe drought, impacting shipping of US-bound goods.
- Global conflicts in regions like the Red Sea and South China Sea present threats to shipping routes, affecting trade and supply chains.
Deep dives
The Panama Canal Drought Crisis
The Panama Canal, a key shipping route connecting the Atlantic and Pacific oceans, is facing a severe drought caused by El Nino and reduced rainfall. As a result, the number of ships allowed through the canal has been significantly reduced, and each vessel is permitted to carry 40% less weight. Some ships have resorted to unloading cargo and transporting it by rail. This crisis is impacting various types of cargo, including containers and cruise ships, and is leading to longer waiting times, higher prices, and potential supply chain disruptions.
