Ricaurte Vásquez, the Panama Canal’s administrator, predicted a significant revenue decline for the fiscal year 2024 yesterday.
He estimates a drop in toll income of between 500 to 700 million dollars.
This reduction is mainly due to transit restrictions caused by the lack of rain and low water levels in the canal.
Vásquez shared this information during a media briefing focused on water-related challenges.
The event took place at the Panama Canal’s Ascanio Arosemena Auditorium.
He emphasized that the first quarter of the current fiscal year saw a notable decrease in canal usage.
Specifically, there were 791 fewer transits and a 20% reduction in cargo compared to the same period last year.
This decline in canal activity has led to a loss of about 100 million dollars per month in tolls compared to the previous year.
Vásquez pointed out that while auction mechanisms are in place to offset the toll revenue loss, they may not fully cover the deficit.
He cautioned that, despite these mechanisms, the Canal could still see a significant decrease in its toll revenue.
Vásquez also noted that other maritime service incomes help to balance the loss.
However, he warned that market adjustments and decreased waiting times for canal transits could lead to lower auction prices.
These prices have been unusually high in the early part of this fiscal year.
Background
The Panama Canal’s revenue decline is linked to drought, affecting its operations and ship transit.
Climate change has led to unpredictable rainfall, reducing the canal’s water levels.
Drought challenges the canal’s capacity, limiting ship numbers and sizes, which reduces toll income.
Disruptions in canal operations impact global trade and shipping costs significantly.
The Canal Authority is implementing water-saving measures and adjusting schedules to combat these effects.
However, persistent drought may overwhelm these efforts.
This situation highlights climate change’s impact on global infrastructure, emphasizing the need for sustainable water management and climate adaptation.
The canal’s experience serves as a global example for similar environmental challenges.