Snarled Supply Chain? Drought Prompts U-Turn Of Two Gas Tankers At Panama Canal

The El Niño weather pattern has sparked a drought this year across Central America that is creating extreme congestion at the Panama Canal, prompting some ships to turn around and seek alternative routes. 

New shipping data from Bloomberg shows two liquefied petroleum gas (LPG) carriers, Pyxis Pioneer and Sunny Bright, recently turned around within 10 miles (16 kilometers) of the canal before sailing away. 

Both vessels have a capacity of 158,000 cubic meters of LPG and were en route to major LPG facilities in the US Gulf. Their current destination, however, remains to be determined. 

The canal relies on rainwater from Gatun Lake, a nearby artificial reservoir, to feed the lock system. The lack of rainfall this year because of El Nino has led canal authorities to impose draft and sailing restrictions. 

One week ago, the Panama Canal Authority (PCA) said October was "the driest since the earliest registers, 73 years ago" and "caused by the El Nino phenomenon continues to impact the Panama Canal's reservoir system and, as a result, water availability has been reduced."

PCA has reduced the number of booking slots for vessels to transit the canal from 31 to 25 this month and will be reduced by nearly 30% to 18 by Feb. 1, 2024. In comparison, the maximum number of sustainable bookings is between 38-40 per day. 

The most common vessels transiting the crucial waterway are dry bulk, containers, chemicals, and LPG vessels. 

While the major supply chain disruptions from the pandemic have declined, new challenges are arising due to the low water levels at the Panama Canal, causing fresh supply chain issues.