The Panama Canal and Natural Supply Chain Disruptions

Jul 29, 2021Blog, Ocean Cargo

Like many unpredictable factors in the logistics industry, extreme weather events and drought play a huge role in the success and failure of the supply chain flow. Specifically, we’re talking about the consequences of droughts, flooding from extreme weather, and rising ocean levels.

Although the Panama Canal hasn’t suffered from a massive blockage akin to this year’s Suez Canal incident, it is facing a world of other problems that may prove far more difficult to navigate.

Let’s take a closer look at some of the natural factors affecting the Panama Canal and their effects on the logistics industry at large.

An Overview of The Canal

The Panama Canal, a lock-type canal that connects the Atlantic and Pacific oceans through the narrow Isthmus of Panama, has been a pivotal player in world trade for over a century. 

The canal needs an average of 52 million gallons of water per ship to move successfully through the passageway each day. Because of this, a change in water level has the potential to cause some serious snags in capabilities. Periods of flood and drought are the biggest culprits in fluctuating water levels, which can cause trouble, since the canal needs consistency to maintain normal operations. 

Consequences of Changing Water Levels

There is a gamut of issues when it comes to navigating changing water levels in the canal. It may seem counterintuitive that a canal that connects two oceans can suffer from a lack of water, but drought can easily make that a reality.

Ships need a certain level of water to ensure that their hull doesn’t run aground in the canal. Lower water levels can result in restricted weight limits on cargo, leading to delays or even postponed shipments. Conversely, an excessive amount of water can flood critical infrastructure, prevent the locks from operating properly, and restrict traffic flow.

When ships cannot pass through the canal for either reason, it often results in shippers looking for other routes from Asia to the U.S. East Coast. This may mean redirecting freight through the Suez Canal or West Coast ports, potentially having to detour across rail and truck networks.

Either issue can lead to cascading effects to major transport demands and timelines.

These sorts of delays can cause widespread increases in shipping times and costs that echo throughout the supply chain. Ultimately, such weather-related events, droughts, and floods are entirely unpredictable and outside human control. But you can rest assured that your company’s TOC representative is standing by to advise and provide informed insight on how to navigate these obstacles. Contact us today to learn more.


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