Panama Canal's bottleneck eases, some vessels detour

FILE PHOTO: Cargo vessels transit through the Panama Canal, on the outskirts of Panama City

By Elida Moreno and Marianna Parraga

PANAMA CITY (Reuters) - A backlog of vessels waiting to pass the Panama Canal due to drought-related restrictions has eased in recent days after the waterway's authority authorized more non-booked ships to pass and as others are choosing alternate routes to avoid the delays.

The Panama Canal Authority last week opened two additional slots per day for vessels without booking to transit to help clear bottlenecks on both sides of the interoceanic corridor.

It has, however, kept the total number of ships passing through to per day to a maximum of 32, versus 36 per day in normal conditions.

A historic drought has slowed shipping through one of the world's busiest waterways amid restrictions implemented in recent months, including reducing the draft of ships passing through and limiting crossings.

As of Tuesday, 125 booked and non-booked vessels were waiting to pass, down from more than 160 ships two weeks ago, according to official numbers. Another 40 vessels were approaching the waterway, versus 50 two weeks ago, according to Refinitiv Eikon data.

"In line with our commitment to providing a reliable and sustainable service, we have chosen to extend booking Condition 3. This allows us to manage congestion and ensures ships en route or in queue, which haven not secured reservations, can still transit in competitive time frames," the canal's authority told Reuters this week.

However, the average wait time for vessels to pass has risen to between 10 and 11 days this month, from 6-7 days last month. The waiting surpasses 17 days for cargo vessels and liquefied petroleum gas carriers, and is almost 13 days for tankers.

The delays have caused friction among its neighbors. Colombia's President Gustavo Petro on Tuesday warned about the drought hitting Panama, while Mexico's President Andres Manuel Lopez Obrador insisted on Monday on a long-standing proposal to open a water corridor in his country.

Even though rain has intensified in Panama in recent weeks, the maximum draft authorized by the canal remains restricted to 44 feet (13.4 m), which places weight limitations on ships including container ships, bulk carriers and tankers.

A growing number of ships are trying to avoid the waterway amid the delays, draft restrictions and rising freight costs for consumer goods and commodities between the U.S. and Asia, and from South America to Europe, to China and the U.S. West Coast, according to sources and analysts.

"If you're talking about a long-term disruption that could go into the fall, as a shipper I'm going to find a different alternative for my product if I can't count on getting through the (Panama Canal's) locks in a reasonable time," said Abe Eshkenazi, CEO of the Chicago-based Association for Supply Chain Management.

(Reporting by Elida Moreno in Panama City and Marianna Parraga in Houston; Editing by Marguerita Choy)