International Maritime amount of rainfall in Gatun Lake, which replenishes the locks with fresh water after each ship transit.

So much depends on how El Niño behaves in the coming months. The National Oceanic and Atmospheric Administration on Aug. 13 said there is a 70 % chance that this year’ s El Niño will be the strongest on record.

Memories are fresh from when water levels in the Panama locks began falling in May 2023, dipping to a record low of 44 feet that July. By December, ocean carriers of THE Alliance had begun to halt canal transits on three of their weekly services. This had negative knock-on effects at key transshipment ports in Central and South America. Maersk eliminated transits on a north-south service and instead hauled containers via a 50-mile rail service across the Isthmus of Panama.

The drought stretched into 2024, as diversions away from the Suez Canal due to Houthi attacks on commercial shipping in the Red Sea increased, further straining the Asia-North America system. Draft restrictions at the Panama locks would only begin easing in the spring of 2024.

US West Coast ports began clawing back the share of laden US imports from Asia to the US East Coast, arresting years of bleeding, according to data from PIERS, a sister company of the Journal of Commerce within S & P Global.

But much of that was due to frontloading ahead of an eventual realized strike threat on the US East Coast, as the West Coast enjoys a natural geographical advantage for time-sensitive shipments.

Longer eastbound transits around southern Africa due to Red Sea diversions also drove shipments normally sent to East Coast ports to West Coast ports. Then, the Panama Canal restrictions were one factor stretching the Asia-US shipping system.

Gene Seroka, executive director of the Port of Los Angeles, isn’ t taking chances in case drought conditions in Panama worsen. He’ s alerted the Harbor Trucking Association( HTA), terminal operators, and the International Longshore and Warehouse Union( ILWU) about the possibility of an uptick in cargo to ensure they are prepared to use their latent capacity, if necessary, at the largest US import gateway.

“ I see the potential for diversion of cargo to the Southern California gateway,” Seroka said.“ It will probably be just a portion of the cargo, base case, about 5 % going to the LA-Long Beach gateway.”

email: michael. angell @ spglobal. com email: mark. szakonyi @ spglobal. com

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