Ships Take Long Way Around as Drought Snarls Panama Canal
Maritime traffic through the Strait of Magellan rose more than 70% in both August and September from year-ago levels, according to Chilean Navy data requested by Bloomberg, as ships diverted from the drought-stricken Panama Canal. Sparse rainfall linked to El Niño lowered water levels in the canal, prompting authorities to restrict crossings, and Middle East disruptions also led some operators shipping goods from South America and West Africa to Asia to avoid that region and likely reroute through Magellan, Bloomberg Intelligence analyst Kenneth Loh said. The increase, which began in July, coincided with the winter season, when heavy snowfall in the Andes slowed truck traffic between Chile and Argentina, and the Punta Arenas Maritime Governor's Office expects the upward trend to continue as the cruise season gets underway.
Why it matters: The diversion illustrates the trade routes theme, in which climate and geopolitical disruption at maritime chokepoints redirects shipping and raises the importance of alternative passages.