The restrictions, implemented earlier this year to conserve water amid prolonged drought, triggered a backlog of ships waiting to pass the key global waterway, which handles an estimated five per cent of world trade, contributing to more expensive freight costs ahead of the approaching Christmas season.

The bottleneck at the canal connecting the Pacific and Atlantic Oceans has eased about 20 per cent since last week, but waiting times to transit the waterway doubled last month from July in some vessel categories, while many ship owners have opted for alternate routes to avoid costly delivery delays.

The authority that manages the canal added in a statement that this week’s ship traffic represents a “normal” level for this season.

It noted that a month before the end of its 2023 fiscal year, the canal’s total vessel crossings already total nearly 800 more that what the canal authority’s budget had forecast.

The additional vessel crossings, which contribute to a total of more than 13,000 transits so far during the fiscal year, show strong demand by vessel owners.

But insufficient rainfall continues to negatively impact the Gatun Lake, which feeds the canal, lowering its water level to 24.2 metres, versus 26.6 for the month of September in recent years.

Each vessel passing through the 80-km trans-oceanic waterway uses some 193 million litres of water from the lake.

At the end of the rainy season in November, the lake’s water level typically reaches some 27 metres and then drops to slightly below 26 metres after the dry season ends in April, according to the canal authority.

Experts have warned about maritime trade disruptions ahead of what is shaping up to be an even drier period next year. They argue that a potential early start to Panama’s dry season and hotter-than-average temperatures could increase evaporation and result in near-record low water levels by April.

— Reporting for Reuters by Eli Moreno; additional reporting by Brendan O’Boyle; writing by Marianna Parraga.

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The Panama Canal Authority last week opened two additional slots per day for vessels without booking to transit to help clear bottlenecks on both sides of the interoceanic corridor.

It has, however, kept the total number of ships passing through to per day to a maximum of 32, versus 36 per day in normal conditions.

A historic drought has slowed shipping through one of the world’s busiest waterways amid restrictions implemented in recent months, including reducing the draft of ships passing through and limiting crossings.

As of Tuesday, 125 booked and non-booked vessels were waiting to pass, down from more than 160 ships two weeks ago, according to official numbers. Another 40 vessels were approaching the waterway, versus 50 two weeks ago, according to Refinitiv Eikon data.

“In line with our commitment to providing a reliable and sustainable service, we have chosen to extend booking Condition 3. This allows us to manage congestion and ensures ships en route or in queue, which haven not secured reservations, can still transit in competitive time frames,” the canal’s authority told Reuters this week.

However, the average wait time for vessels to pass has risen to between 10 and 11 days this month, from six to seven days last month. The waiting surpasses 17 days for cargo vessels and liquefied petroleum gas carriers, and is almost 13 days for tankers.

The delays have caused friction among its neighbours. Colombia’s President Gustavo Petro on Tuesday warned about the drought hitting Panama, while Mexico’s President Andres Manuel Lopez Obrador insisted on Monday on a long-standing proposal to open a water corridor in his country.

Even though rain has intensified in Panama in recent weeks, the maximum draft authorized by the canal remains restricted to 44 feet, which places weight limitations on ships including container ships, bulk carriers and tankers.

A growing number of ships are trying to avoid the waterway amid the delays, draft restrictions and rising freight costs for consumer goods and commodities between the U.S. and Asia, and from South America to Europe, to China and the U.S. West Coast, according to sources and analysts.

“If you’re talking about a long-term disruption that could go into the fall, as a shipper I’m going to find a different alternative for my product if I can’t count on getting through the (Panama Canal’s) locks in a reasonable time,” said Abe Eshkenazi, CEO of the Chicago-based Association for Supply Chain Management.

— Reporting for Reuters by Elida Moreno in Panama City and Marianna Parraga in Houston.

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