Panama Canal Choked by Drought

The Panama Canal faces severe congestion and delays due to ongoing drought conditions. The number of vessels waiting to cross the canal has reached 154, resulting in a wait time of around 21 days. The Panama Canal is a crucial trade route for U.S. shippers, the U.S. being the largest canal user. Around 73% of Panama Canal traffic is attributed to U.S. commodity export and import containers, representing about $270 billion in cargo. The drought has led to a reduction in water levels in Gatun Lake, which feeds the canal. The congestion and reduced booking slots have led to ships without reservations waiting in line. This backlog has prompted concerns about potential impacts on supply chains, including longer lead times, increased fuel costs, and the possibility of higher prices for goods.