Over the last month, the Panama Canal, one of the world’s two most important waterways, has encountered an unprecedented problem that could jeopardise global trade, even next year.

The severe drought in 2023 significantly diminished the flow rate to an extent that it has impeded the passage of container ships. In the past few weeks, a number of ships have been stuck with very long waiting times, and it seems that the situation is not going to improve.

Panama Canal: the consequences for trade routes and transport

The reduced navigability of the Panama Canal is a direct consequence of the situation of drought in the region, due to the prolonged periods without rain, which are the result of climate change.

It is estimated that the number of ships that can cross the canal per day fell from 31 to 25 in November and could continue to fall to just 18 from February 2024.

Not only that, the decreased water flow in the canal has reduced the draught to a maximum of 44 feet. Under normal conditions, this would be 50 feet. But what does this mean? This means that in order to pass through the canal, ships have to reduce their cargo load, travelling with part of their cargo hold empty, which leads to an increase in costs.

The solutions

Restrictions on the passage through the Panama Canal have generated uncertainty and additional costs for several companies.

Companies are moving to find alternative solutions to avoid the delays and excessive costs caused by the gridlock of transport.

Some have opted to closely monitor shipments to identify and deal with delays promptly, effectively managing any inconveniences for customers. Others are exploring alternative solutions, routes or modes of transport to reduce the uncertainties arising from the situation.

Diversification, planning, but also clear assessment of risks and additional costs are essential today to ensure optimal management of operations and reduce associated losses. At Marfreight, we strive to implement these principles daily in the services we provide, through continuous monitoring of the international freight transit situation and seeking solutions to meet the different needs expressed.

For years, shipowners are working on achieving an ambitious goal, a zero-emission shipping. A goal that cannot be postponed.

In this regard, the International Chamber of Shipping (ICS), the main international trade association of shipbuilding industry, has proposed to create a fund worth 5 billions of dollars, in order to finance the technologic innovation needed to reduce emissions.

The proposal of the creation of the fund has been presented for the first time in 2019. Last year, it has received the support of the main maritime countries, such as Denmark, Greece, Japan, Panama, Singapore and United Kingdom. But also developing countries such as Liberia, Niger and Palau.

Zero-emission shipping: shipowners’ commitment

In order to reach a real decarbonisation of the maritime sector, it is fundamental a decisive push to the creation and use of new technologies and sustainable fuels

Shipowners, for their part, are working hard to have greener ships. A work slowed down by a low availability of alternative fuels, lack of infrastructure for the supplies and the creation of conditions, regulatory and bureaucratic, aimed at receiving in a decisive way the green change.

What slowed down Ics members’ commitment is also Imo (International Maritime Organization) lack of decision about the 5 billions of dollars fund. A fund that shipowners would be willing to finance out of their own pocket, with a withdrawal fee of 2 dollars per tonne, to apply to marine bunkering.

Confitarma’s voice

Mario Mattioli, president of Confitarma (Italian Confederation Shipping), has pointed out many times that the shipowning industry has already put together a series of solutions and investments to promote emission reduction. An example is the use of LPG as an alternative fuel, the use of batteries during the pause of the ships at the port, the Cold ironing.

The government, clarified the president of Confitarma, has already made a move in this way, with the PNRR 500 millions of resourches, intended for making the italian fleet greener. The risk is that, from that amount, currently reserved only for coasting sector in the Mediterrean, could be excluded an important part of company ships rooted in Italy, the ones that are working for a long time to build their path towards sustainability.

Sustainability of maritime sector has always been a subject very dear to us, MarFreight.That’s why, in our supporting role for companies in the shipping planning, we try to choose partners that, besides being the best solution for our customers’ needs, are also actively committed to support environmental protection projects.