Fixing the Panama Canal

Yves here. We’e mentioned that water scarcity is becoming such an issue in Panama that the government is having to embark on large-scale desalination to have some prospect of having enough for the canal and farmers. This post gives a high level look at the possible effects on commerce.

By Thomas Neuburger. Originally published at God’s Spies

Image source: Panama Canal Annual Report 2022

One of the discussions in the global warming arena — relatively hidden from most people by the ever-careful press — is the tension between preserving our modern, high-tech, energy-intensive, globally dependent life on the one hand, and the need to preserve a human-friendly environment on the other.

Global Life in the Balance

The question — Can we preserve our modern high-energy-use lives and still have a livable world? — is rarely asked. Yet that’s perhaps the most important question of them all.

Let’s say, for example, that we have (I’m pretending) twenty years to deal with climate change effectively, after which we can’t. How should we spend those twenty years? What solutions should we pursue? If we choose to pursue unviable ones, we’ve wasted our time.

Or, as some genius almost wrote, It makes no difference how fast you climb the ladder, if it’s the wrong ladder.

Tree stumps rise above the waterline of the Panama Canal. Photographer: Walter Hurtado Lozano/Bloomberg

The information below, from Bloomberg News, should be part of that discussion. Bottom line: Global warming is destroying the Panama Canal.

With water levels languishing at six feet (1.8 meters) below normal, the [Panama Canal] authority capped the number of vessels that can cross. The limits imposed late last year were the strictest since 1989, when the conduit was shut as the US invaded Panama to extract its de facto ruler, Manuel Noriega. Some shippers are paying millions of dollars to jump the growing queue, while others are taking longer, costlier routes around Africa or South America.

The constraints have since eased slightly due to a rainier-than-expected November, but at 24 ships a day, the maximum is still well below the pre-drought daily capacity of about 38. As the dry season takes hold, the bottleneck is poised to worsen again.

According to the US International Trade Commission, the Canal “has 46% of the total market share of containers moving from Northeast Asia to the East Coast of the United States.”

A reduction to 24 ships per day from the normal 38 doesn’t sound like a lot, but that’s a 36% loss in annual Canal traffic. Imagine the East Coast without 17% of its Asian-sourced fuel and goods, or having to bear the cost of rerouting that traffic through thousands more miles at sea.

Modern, high-tech, energy-intensive global life is under threat. What’s the price of saving it? What’s the price if we try to save it and fail?

Fixing the Panama Canal

Plans to “fix” the Canal sound like plans to “fix” the climate: Bill Gates-style high tech fantasies.

“In the long term, the primary solution to chronic water shortages will be to dam up the Indio River and then drill a tunnel through a mountain to pipe fresh water 8 kilometers (5 miles) into Lake Gatún, the canal’s main reservoir.”

That’s a $2 billion project if it comes in on budget. But is it a long-term fix? Bloomberg admits that Panama “will need to dam even more rivers to guarantee water through the end of the century.” Sounds like Band-Aids to me. Lots of them. And residents of the to-be-flooded land are vigorously opposed, so it will be a political fight to move them.

“Another potential fix is decidedly more experimental … cloud seeding, the process of implanting large salt particles into clouds to boost the condensation that creates rain.”

The article is not optimistic that this will work. Another Gatesian dream: Pretty. Impossible. Or to say that differently, pretty impossible.

The Price of Global Life

As Bloomberg notes, “The crisis has set back available shipping routes by more than a century. When it began operating in 1914, the canal provided an alternative to the Suez Canal, the Cape of Good Hope and the Strait of Magellan to send goods between the Northern and Southern Hemispheres.”

With the Canal at reduced capacity, the cost of global shipping is going up — picture those Asian containers moving east, not west, to arrive in New York harbor — and the other alternatives are themselves being strained (see link in quote above). Now add in the threats in the Suez thanks to Israel’s determined and inflammatory war against Gaza, and there’s a problem that lacks a solution.

So again, which will be first to fail? A livable climate? Or modern high-energy life?

Place your own bets ­— your betters have already placed theirs.

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  1. The Rev Kev

    Not a hydraulic engineer obviously but I had a thought. Instead of damming up one river after another in a Sisyphean task to ‘save’ the Panama canal, how about another approach. I understand that it takes an average of 200,000,000 L (52,000,000 US gal) of fresh water to pass through an average ship. So perhaps it might be possible to pipe in seawater to do the same from the surrounding oceans. You would probably need locks to stop that sea water from having a severe effect on surrounding lakes but what the hey, it’s just engineering. But if that does not work, then perhaps we just need to let nature take its course and to let the canal go. Literally just let it go. It is of course ironic that the goods that these ships carry as well as the bunker oil they burn helped change the climate which is having such an effect on the Panama canal so perhaps the new economy should be focused on having more local production obviating the need for such huge amounts of maritime traffic.

    1. Yves Smith Post author

      Because I was on the receiving end of way too much hype about Panama from one of the more prominent “live overseas” newsletter and related grifting enterprise which touts Panama aggressively, and pretty immediately stumbled across the Panama Canal water issue (which has ramifications for the economy), I did a wee bit of digging. As indicated, the government is looking into large-scale desalination. That strongly suggests they dare not use raw ocean water because the salt would get into the water table and mess up drinking water and plant life.

      1. The Rev Kev

        And that explains why they are using river water for those ships and not ocean water. Should have thought of ocean water seeping into the water table. Thanks.

      2. redleg

        Hydrogeologist here-
        You are 100% correct.
        The reservoir also povides water for agriculture and potable uses. Salt water would eliminate the lake as a source of fresh water and completely and possibly permanently disrupt potable groundwater in the region around the lake. IOW it would wreck two main sources of drinking and agricultural water in Panama.
        I’ll let biologists contemplate the ecological consequences of doing this.

  2. ciroc

    The shipping industry itself is a major contributor to global warming, accounting for approximately 3% of global greenhouse gas emissions. Despite the obvious need for proper regulation, it is hampered by the notorious practice of flag-of-convenience.

  3. Eoin Clancy

    I don’t believe the current problem with the Panama canal is ‘climate ‘ related in any way.
    For decades there was no problem with the canal until the canal was enlarged.
    If you have a fixed supply of fresh water and you decide to expand a canal network, obviously the water levels in the entire canal infrastructure will decrease.
    Like everything nowadays, it’s simply easier to blame everything on climate change, from badly managed forestry, undredged rivers, building on flood plains to badly conceived engineering projects such as the Panama canal.

    1. Yves Smith Post author

      This comment violates our overarching written rule for comments. From our Policies:

      You are not entitled to your opinion. You are entitled to your informed opinion. No one is entitled to be ignorant.

      -Harlan Ellison

      The IMF disagrees with your unsubstantiated opinion:

      As does S&P:

      Other search results attribute the cause as “lack of rain”.

      We expect readers to substantiate their views with links. You did not provide any. So please up your game or you will get more boxings around the ears. I take umbrage at having to waste time better spent on new posts instead vetting the accuracy of comments.

        1. atlantafox

          Actually, no. Links are only as good as being carefully read or, in this instance, accurately quoted.

          What the BBC writes is: “The new series of locks were designed as part of the Panama Canal expansion project, which aims to conserve water by catching and re-using some of it. Passage via the older lock system consumes around 500 million litres (110 million gallons) of water while the new route requires 200 million litres (40 million gallons) per ship. But the drought has undermined the purpose of the expansion project by limiting the number and size of vessels that can pass through.” (italics mine)

          The hyperlink embedded within this BBC quote says,“The “old” Canal, built by the Americans at the beginning of the last century, and which today still gives a return of 2.5 billion dollars, will continue to operate.”

          The old lock system uses the same amount of water as usual, while the new lock system was designed to use less water. Consequently, there has been no overall reduction of water, and in fact, an additional demand on the reservoir (Gatun Lake) for which it was not originally dredged to meet, with climate change now a contributing factor.

          I agree with Eoin Clancy that this is a much more complex problem and other underlying factors should not be so easily dismissed, or attributed to solely climate change.

          1. Yves Smith Post author

            I fail to see the point of what you wrote. The issue was the new lock system uses less water, contrary to the claim of the writer above that asserted it used more. The fact that the drought has resulted in the new lock system not having enough water in no way disproves the initial point. You are acting as if you disagree when you are simply giving a longer form account of the basic issue.

            1. atlantafox

              My apologies for my inability to clearly communicate. Rather than trying again, let me bring to your attention another climate related issue. Extinction Rebellion will strategically change tactics from civil disruption to acceptance of locked in climate crisis and how to proceed going forward.

              Roger Hallam’s (XR co-founder) will be conducting a worldwide zoom session January 14, 11:00am EST. Link to register.


              Two other short but useful links:

              Building a New Civilization in 2024

              Telling the Truth So We Can Learn From Mistakes – Reflections Five Years On

          2. Myron A. Schroeder

            This discussion on the water used for a transit has gotten confused in part to the misinformation in that BBC link provided by “farragyt” above. And “altantafox” is correct in his statement: “Actually, no. Links are only as good as being carefully read or, in this instance, accurately quoted.”
            Without any links but based upon my knowledge acquired in 37 years of employment with the Panama Canal agencies the old locks put in service in 1914 used 52 million gallons of water per transit. Those locks are still in service and are used for vessels with beams less than about 106 feet. Those older locks are 110 feet wide.
            The new locks, which were inaugurated in 2016 well after my retirement from the Panama Canal, have a unique feature not used in the old locks. There are 3 water saving basins constructed next to each lock which recycle the water. The use of the basins is optional but I assume they are used most of the time. When the basins are not used a transit requires 110 million gallons of water. When the basins are used the water used drops to 48 million gallons of water. As a side note the use of the basins increases the salinity of the lakes between the locks at each end of the canal.
            The 110 million is provided in various links. The 48 million is information I received from a friend and former co-worker who continued to work for the Canal while the new locks project was planned and constructed. The 48 million is also confirmed by this foot note on page 60 of the publication “Propuestoa de Amplicacion del Canal de Panama”
            “91. Each transit through the Canal that uses the new locks equipped with three water reuse tubs per chamber will use 7% less water than the one used in each transit through the existing locks. In terms of CPSUAB tonnage, it can be stated that the new locks, because it can handle ships with about two and a half times the carrying capacity, uses less than half the water per ton CPSUAB than the current lock.” (a Yandex translation)
            Seven precent less that 52 million yields 48 million.
            Sorry no link for that publication, I picked up my copy on a DVD at a Canal office in 2006. It is probalbly avalable in the Panama Canal library in Balboa, Republic of Panama.
            The Panama Canal website in the section labled “Gatun Water Level Indicators “ there is a PDF chart on water level of Gatun Lake the major transit portion of the Canal.. The 5 year average for January is about 86 feet and drops to about 81 feet at the low in May. Currently the water level is 81.6 feet. With limits on the number of transits the decline if any in the coming months should be less that the average of the last five years.
            Also of interest Maersk line announced on January 10, that their Oceanic traffic (Australia and New Zealand) normally scheduled for the Panama Canal will be trans shipped by rail across the Isthmus of Panama.
            Note the Panama railroad is single track with some sidings to allow two way traffic. Read the Reuters article to the end and you will see it is privately owned, private capital requires guaranteed returns for any improvements. The railway, formally ownd by the United States via the Panama Canal Commission, was privatized when Panama acquired the the Canal in the year 2000.

  4. ambrit

    A triage of ship borne cargos will be the necessary result. The passing comment about ship owners paying millions to “jump the queue” already tells that financially based ‘cargo triage’ is occurring. Thus, some internationally managed “Official Maritime Cargo Control” will be needed. The alternative is that eternally ‘popular’ Terran human situation, anarchic competition.
    Some level of “Global Warming” is already “baked in.” (Pun? intended.) Terran humans are going to have to deal with it. The Panama Canal problem is just one of many ‘issues’ on our plate. This is one situation where the Jackpot will show it’s true ‘potential.’
    Stay safe, move to higher ground.

  5. digi_owl

    While impossible in practical terms, it is amusing to look at those images and envision a rail system that could cart them whole across Mexico or some such.

    1. Grateful Dude

      Not at all impossible. Veracruz to Salina Cruz – the interoceanic corridor, currently under construction. Ambitious, but troubling. Oaxaca is vibrant, magical, and relatively healthy – 32 indigenous languages there, it doesn’t need international corporations that displace tribes and spoil the local tourism industry. Life there is much more natural than near any population center in the U.S.

      What effect will that have on international shipping?

      oops, someone posted while I was.

  6. upstater

    AMLO has a solution!

    Mexico launches Interoceanic Train service

    Route across Isthmus of Tehuantepec is envisioned as competition for Panama Canal

    While the route will feature passenger service, its primary objective is to provide a freight alternative to shipping through the Panama Canal. Freight service will begin at a later date.

    Part of the Interoceanic route includes a line seized by the government from Grupo Mexico’s Ferrosur rail operation in May; López Obrador later announced the government had extended Ferrosur’s operating concession elsewhere for eight years as compensation for the seizure of 79-mile segment [see “Mexican government announces deal with Grupo Mexico …,” News Wire, June 2, 2023].

    Thee PSR disiples running Mexico’s railroad would never make such an investment. They are rent seeking monopolies just like all classx1s in the US.

  7. Carolinian

    Of course the canal itself was a Bill Gatesian effort that took many years and many many lives to build. In the context 2 billion doesn’t sound like much. I’ve read that another reason for the water shortage is that the Panamanians are developing and using more of the water for that.

  8. Mikel

    What if a list was produced of things that do not need to be fixed? I suspect it wouldn’t take longer than five minutes. It would be a quick way to get some perspective.

  9. John Beech

    Spent 15 years living in Panama, know a fair bit about it.

    1. All this means – right now – is they’ve discovered ultimate capacity. No different than when we hit the limit of how many widgets any given machine cell (one of our CNC mills or lathes, for example) can output. This, because no matter how we optimize the cutting path (material removal), or what we spend on superior tooling (through the tool flow to remove chips faster allowing deeper/faster cuts), and what efficiencies palletizing the work bring about (preloading the jigs and swapping them out so time isn’t spent with dead machine time while the machinist removes finished parts and loads new bar stock), eventually we hit the limit of how many we widgets can make. If a faster machine isn’t part of the solution, then at this point, individual parts pricing now needs to account for this limit. E.g. raise the price to all the market will bear thereby affecting demand – or add machine cells.

    2. Can’t add another canal like I can add another machine cell. Presently, the daily limit (due to water constraints) is 32 ships. For context, in 2008, about 40 ships per day made the transit.

    3. Also, just as we optimize our machine cells, the canal is being/has been optimized. How? The new locks, Gatun East and the Miraflores West, as well as Panamax ships are an example. Basically, the more *ship* within the lock, the less water it takes to operate and thus, the more cargo goes through each cycle (the goal). More ship in this case means the largest ship that ‘juuuust’ fits within the physical confines of a lock, whilst carrying the most number of containers – this is the fundamental process. At present, this works out to 14,000 TEU (20′ equivalents) per lock with physical limits of 366m X 51.25m with 20 row containers and 15.2m draft (Google is your friend, I don’t keep these numbers in my head).

    4. So the discussion now turns to adding water, e.g. a) scavenging water from other sources (rivers) to feed the lake, b) cloud seeding (more water from the sky to feed the lake and rivers) and c) using saline water from the ocean (essentially limitless).

    5. To the last, it involves pumping saline water, and of course, destroying an existing ecosytems and replacing it with whatever nature creates in the new one. The ecowarrors would line up body-to-body against this (to which I’d add mine).

    6. That livelihoods will be affected, goes without saying. Lots of impediments.

    7. With regard to No. 5, what if the fresh water were scavenged (pumps again) from the lower level locks and used to recharge the lake, instead? What efficiencies could be attained? Raises questions like could the ships withstand repeated setting on dry ground (special cradles) whilst the last lock is drained and then salt water allowed to flow in by opening the last lock door so it may be floated out? These are engineering problems and can be solved. It just takes money. Am an engineer, and am familiar with solving problems. This one has a solution.

    8. But we still get back to ultimate capacity, about 40 ships/day vs. 32 ships/day. Means Panama at some point must live within it’s means.

    9. Or make a parallel canal. In my opinion, this is a pipe dream as a Nicaraguan sea level canal is being looked at once again, this time by China and is more likely closer to fruition.

    10. And there’s yap-yap about a canal through Yucatan part of Mexico. Again, Chinese money. However, other problems raise their heads, Chinese money. Where is China going to come up with it now that their property market is undergoing slow motion collapse?

    Me? My money is on nothing happens but moaning and groaning.

    1. digi_owl

      Asking where the money will come from is looking at the wrong end. A better question is if any such project will provide an ROI any time soon if Europe is no longer a viable market for Chinese goods. Because if they are not shipping to Europe then there is little need to cross the American landmass.

  10. DMK

    So what is the cost of the 19th century alternative, the Straits of Magellan? Presumably more than the $4 million paid by the shipper to jump to the head of the line. The Bloomberg article says that going through the Straits adds 30 days to the voyage. So are the additional fuel costs more than $4 million? Any experts out there who care to opine? Costly, yes, but enough to end our high-energy life styles?

  11. Synoia

    1 What would it take to Create a sea level canal?
    2. These was discussion on building a second canal, I believe in throw Honduras

  12. AquaFish

    #The question — Can we preserve our modern high-energy-use lives and still have a livable world? — is rarely asked. Yet that’s perhaps the most important question of them all.#

    The WW3 question may be more important.

    Global trade looks less and less attractive. Between Panama and Suez issues, local manufacturing is getting more economically viable.

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