Panama Canal ‘understands’ Maersk move to rail amid drought

By Elida Moreno

PANAMA CITY (Reuters) – The Panama Canal said on Friday it “understands” clients’ decisions to turn to alternative shipping methods as the canal, one of the world’s busiest trade routes, faces restrictions due to an ongoing drought, and that it was working on solutions to avoid setbacks caused by future climate crises.

On Thursday, Danish shipping giant Moller-Maersk said it would turn to rail to move some cargo, as reduced crossings at the Panama Canal due to low water levels have caused bottlenecks.

“We will continue to support Maersk’s operations, as the announced changes affect just one of Maersk’s services – OC1 Oceania – while other services will continue to transit the canal,” the Panama Canal Authority told Reuters.

The authority added it was developing short- and long-term solutions to limit climate anomalies’ impact on the trade route, which moves about 5% of the world’s commerce.

“We understand that our customers, like us, need to adapt their operations due to the impacts of climate variations around the world and the current water shortage in the Panama Canal,” the authority said.

Maersk’s OC1 service, connecting Australia and New Zealand with the U.S. East Coast cities of Philadelphia and Charleston, South Carolina, via the Panama Canal, will now create two separate loops, one Atlantic and one Pacific.

The workaround comes as vessel owners also are rerouting ships to avoid militant attacks that are disrupting the Suez Canal, its longtime rival trade shortcut, in what has become the largest disruption to ocean shipping since the COVID-19 pandemic.

The Panama Canal typically allowed around 36 crossings a day, but due to the low levels of water required to push boats through the passage, the canal authority has gradually lowered that number. It now allows 24 crossings a day.

(Reporting by Elida Moreno; Writing by Kylie Madry, Editing by Alistair Bell)