More than a third of the ships that expected to use the Panama Canal to cut transportation time and costs were rerouted to sail around South America because a long-term drought in the region dramatically lowered water levels, and the problem is worse than originally expected, the Associated Press reports.
Canal administrators say the drought will reduce revenues by $500- to $700 million, far more than the $200 million originally estimated. The Canal has had to cut the number of possible daily crossings to 24, versus 38 during times with normal water levels. Plus, the drought continues to impact half the Panamanian population, about four million people, who rely on the same lakes that fill the canals for their drinking water.
Of course, longer shipping times will add costs to the bottom line of most products making the trip, plus it will add to insurance costs and losses as the world’s largest container ships must sail around Cape Horn. As commercial shipping operations are avoiding the Suez Canal because of attacks by Houthi rebels in Yemen, consumer costs for foreign goods are heading up.