Huge backlog of 200 ships are stuck trying to enter the Panama Canal as they wait WEEKS amid slowed traffic due to drought: Delays set to wipe $200M off profits and cause spike in US grocery and parcel prices

More than 200 ships have been stranded on both sides of the Panama Canal after authorities restricted crossings due to severe drought.

The large ships, thought to carry goods worth millions of dollars, are stuck in a traffic jam and some have to wait for weeks to cross.

Ship tracking data highlights the magnitude of the problem with hundreds of ships, mostly bulk cargo or gas carriers, waiting at the channel’s entrances in the Pacific and Atlantic.

The number of daily transits through the canal has been limited to 32 by the water boards in an effort to save water.

Panama is at risk of losing $200 million in revenue from the delays and could cause a spike in supermarket and package prices in the US as extra costs are added to shipping costs.

The entrances on both sides of the Panama Canal are jammed with a number of ships stuck in traffic for more than 20 days.

Some shipowners have resorted to rerouting their voyages to avoid the backlog.

The canal uses three times as much water as New York City every day and needs rain to replace it.

But the rainy season is yet to come in Panama and the canal is going through its driest period in more than a century.

Restrictions on the number of passing ships have been extended until September 2.

“The delays are changing day by day. Once you’ve made the decision to go, there’s no point in turning back or deviating, so you could get stuck,” Tim Hansen, chief commercial officer at Dorian LPG, which operates large gas carriers, told the Wall Street Journal.

If it doesn’t rain enough, ship transits are cut short and those lucky enough to cross pay hefty bounties.

This increases transportation costs for cargo owners such as US oil and Asian importers and gas exporters.

Ricaurte Vásquez Morales, the administrator of the Panama Canal, warned that the restrictions may have to remain in place until the rest of the year.

He said the drought could cause a $200 million drop in sales next year if low rainfall continues into winter.

According to him, extreme rainfall or droughts are much more regular than in the canal’s early years.

It poses a huge challenge to the Panama Canal Authority, which supplies about half of the country’s 4.5 million inhabitants with water.

“The channel communicates with its customers so that the information empowers them to make the best decisions, even if it means temporarily re-routing,” said Vásquez Morales.

“Demand remains high, proving that the Panama Canal remains competitive in most segments, even with measures to conserve water.”

Operators have hired the U.S. Army Corps of Engineers, who originally built the canal, and have earmarked $2 billion over the next decade to divert four rivers into the waterway and help ships pass through.

The canal already has three rivers flowing into it.

No major inconvenience has been caused to container ships, the largest users of the canal.

Most get preferential status because they work on set schedules and book crossings up to a year in advance.

However, some get caught up in the chaos and have to pay several times the average toll.

Lars Oestergaard Nielsen, head of customer supply in the Americas at shipping company AP Moller-Maersk, said: ‘We had two ships that couldn’t book and it was quite expensive.

“We went to an auction and paid $900,000 on top of the $400,000 normal toll for each ship to cross.”

Usually ships cross the channel with an average draft of 15 meters, but this has now been reduced to 14 meters to deal with the drought.

Large boxships have to cross with fewer containers to cope with the lower water depth. Smaller ships are added to help move the rest of the cargo.

Those not on fixed routes, such as bulk and gas tankers booked to carry goods at short notice, are experiencing the greatest delays.

Oslo-based Avance Gas operated 17 ships and had to divert 75 percent of the ships carrying U.S. exports of butane and propane.

Ships transporting these products to Asia sail through the Suez Canal or around the Cape of Good Hope.

“Waiting time is one thing, but it is also the uncertainty,” said CEO Øystein Kalleklev.

‘It’s risky to repair a ship without a fixed route, because you can lose the contract if the wait is too long.

The Panama Canal is a complete mess these days. Twenty days in traffic is unprecedented at this time of year.’

Huge ships carrying bulky items such as coal and iron ore are stuck in traffic jams. They are usually owned by medium or small operators and are not prioritized.

Maritime companies and experts say the restrictions could put pressure on consumer goods prices as delays and additional costs increase shipping costs.

It could lead to higher prices and fewer choices for American consumers.

The Panama Canal is important for the transportation of consumer goods from Asia to the United States, especially prior to peak seasons such as Christmas.

It also enables faster transportation of US goods to Asia and the Pacific coast of South America.

The Panama Canal has a market share of 40 percent of containers moving from Northeast Asia to the US East Coast.