The increased restrictions imposed by the Panama Canal Authority (PCA) are driving shippers to reorganise their shipments, opting to redirect them from the US East Coast to the West Coast, especially shipments from Asia.

As a result of prolonged drought, the Panama Canal Authority reduced the maximum draft for its neopanamax locks and cut the number of ships allowed to transit. Analysts claim these measures could remain in effect until the new year as dry weather continues.

According to a report by shipping news site Splash247, the PCA is exploring alternative methods to facilitate the transportation of shipments. Late last month, the canal said its future focus "is not only limited to addressing current challenges but also includes proactive environmental initiatives." This includes exploring "the possibility of developing a logistics corridor to diversify cargo handling options within the country."

At a press conference, canal administrator Ricaurte Vasquez said: "We have to find solutions so that we can continue to be a relevant route for international trade," reports Splash247.

This month, the waiting times for vessels increased from 15 days on 1 August to more than 20 days on 10 August. Analytical data reveals that an average of 58 boxships crossed the canal each week during the weeks covering July and early August.

Chief analyst at research platform Xeneta, Peter Sand, told the media shippers must consider alternative options as Panama congestion rises. Speaking to Splash247, Andy Lane from container advisory CTI Consultancy suggested, "back-haul container services can go 2,000 nautical miles further through the Suez Canal or 5,000 nautical miles further around Africa." Some head-haul services can also be switched to the Suez as well, he added.

Rail freight as an alternative for US shipments

One of the alternatives that analysts believe could be adopted by shippers of US cargo is the recently launched Canadian Pacific Kansas City (CPKC) railroad. A Seatrade Maritime News report says this initiative was launched in April of this year out of a merger of Canadian Pacific and Kansas City Southern, "creating a single line railway connecting Canada, the US and Mexico."

This initiative managed to connect the Lazaro Cardenas Port in Mexico with the US Gulf and the US Midwest markets, says CPKC officials.

"A shipper can avoid maybe having their cargo taken off the vessel, or restricted in cargo weight, and actually load onto an Asia service coming directly in the Lazaro Cardenas, discharging there and railing into the Houston, Dallas, Kansas City and Chicago markets," Corey Heinz, Managing Director Sales for CPKC, tells Seatrade Maritime News.