Drought-related problems in the Panama Canal, which connects the Atlantic Ocean to the Pacific Ocean, have raised alarm bells. According to an announcement by the Panama Canal Authority, the maximum number of transits will be limited to 32 ships per day until September 2, Reuters reported.
The restrictions on the more than 80-kilometer-long waterway linking the Atlantic to the Pacific came after low rainfall in the Central American region, Reuters reported. Congestion on the canal, one of the world's busiest trade gateways, has prompted companies that usually use the waterway to seek alternative routes.
The Panama Canal is reducing costs and transit times for many shippers, including major retailers and energy companies trading between China and the United States (US). As of August 10, there were 161 ships near the canal, officials told Reuters.
Since the beginning of the year, the canal had imposed a series of depth restrictions as drought caused by the El Nino weather event put pressure on water resources. However, in June, the canal postponed further restrictions that would have required ships to lighten their loads for easier passage.