Drought Can’t Stop Panama Canal From Hitting Record $3.45 Billion Profit

The Panama Canal ended its fiscal year in September with a profit of $3.45 billion, a 9.5% increase compared to the previous year, despite facing drought-related issues.

Per the canal authority, this profit increase occurred after canal operations were adjusted due to a major water shortage.

With one of the driest years on record, the canal’s water supply was limited, reducing the number of vessels that could transit daily and imposing restrictions on ship draft sizes.

Beginning in late 2023, these changes slowed passage rates and forced some vessels to take different routes. However, limits were lifted later in 2024 when rainfall restored water reservoirs to necessary levels.

During this period, the canal facilitated the movement of 423 million tons of cargo, with an average daily passage rate of 27.3 ships, down from 36 vessels per day the previous year.

However, the canal’s revenue increased slightly to $4.99 billion, per Victor Vial, vice president.

A planned 5% decrease in operational costs by 5% helped reduce the financial burden caused by the lower vessel count.

The canal authority is developing new incentives to encourage the return of essential vessels like bulk carriers and liquified natural gas (LNG) tankers.

The authority plans to enhance its services to meet demand as part of a $8.5 billion seven-year infrastructure plan.

Additionally, the canal has implemented a long-term reservation system, allowing shippers to bid for passage slots up to a year in advance, along with water-saving techniques that have reduced water consumption per transit by 12% over the last year.

The authority is investing in a $1.6 billion project to build a dam on the Rio Indio River to address future climate challenges. The dam will reduce water scarcity during extreme weather conditions.

However, this project will involve the relocation of hundreds of residents near the canal.

Viad says that the transits are improving, adding that the canal passage slots are not yet fully booked but that recovery efforts and incentives are having a positive impact on traffic levels.

Reference: Reuters

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Source: Maritime Shipping News