Panama Canal is so backed up and ‘unreliable’ that ships are detouring thousands of miles to avoid costly delays

The Panama Canal has become so backlogged that the world’s largest operator of chemical tankers has decided to reroute its fleet to the Suez Canal.

London-based Stolt-Nielsen, which has a tanker division with 166 ships, is charging customers additional costs for the longer route, it said in an email. A bottleneck at the Panama Canal due to low water levels has prompted shippers to divert to Suez, the Cape of Good Hope, or even through the Strait of Magellan off the tip of South America.

“Stolt Tankers has found that the service through the Panama Canal has become increasingly unreliable in recent months,” the company said in an email. “Our customers need reassurance that their cargo will arrive on time to avoid negatively impacting their supply chains, therefore we have been rerouting our ships via the Suez Canal.” 

The Panama Canal Authority, which normally handles about 36 ships a day, announced on Oct. 30 that it will gradually reduce the number of vessels to 18 a day by Feb. 1 to conserve water heading into the dry season. Panama had the driest October on record due to a drought caused by the El Niño weather phenomenon, the authority said.

It’s unlikely that the canal will be able to increase traffic until the rainy season starts in mid-2024, according to experts. Some ships have had to wait as long as 20 days to get through the canal this year. Stolt said other shippers are “taking a similar approach” to deal with the backlog at the canal. 

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