1 00:00:00,560 --> 00:00:03,480 Speaker 1: Hi, I'm Sarah Holder. I'm a new host for The 2 00:00:03,480 --> 00:00:05,560 Speaker 1: Big Take, and I'm thrilled to be in your feed 3 00:00:05,559 --> 00:00:08,440 Speaker 1: this week along with Salaiah Mosen in Washington, d C. 4 00:00:08,960 --> 00:00:12,360 Speaker 1: And Juanha in Hong Kong. Each day we'll share one 5 00:00:12,440 --> 00:00:16,520 Speaker 1: big story on money from all around the world. Today, 6 00:00:16,680 --> 00:00:24,639 Speaker 1: we travel to Panama, specifically to the Panama Canal. The 7 00:00:24,640 --> 00:00:27,720 Speaker 1: Panama Canal is an artificial waterway that connects the Atlantic 8 00:00:27,720 --> 00:00:30,200 Speaker 1: Ocean with the Pacific Ocean. It cuts right through the 9 00:00:30,200 --> 00:00:32,880 Speaker 1: middle of Panama, and for more than a century it's 10 00:00:32,880 --> 00:00:34,800 Speaker 1: been one of the main routes for global trade. And 11 00:00:34,920 --> 00:00:38,960 Speaker 1: almost everything that touches our lives have one thing in common. 12 00:00:40,440 --> 00:00:42,560 Speaker 2: It comes through the Panama Canal. 13 00:00:43,400 --> 00:00:46,400 Speaker 1: And when they say almost everything that touches our lives, 14 00:00:46,760 --> 00:00:48,680 Speaker 1: they mean everything. 15 00:00:48,600 --> 00:00:52,720 Speaker 2: Cars, refrigerators. You have a lot of produce coming from 16 00:00:52,800 --> 00:00:56,760 Speaker 2: South America, from Chile, Peru that uses the canal. 17 00:00:57,080 --> 00:00:59,880 Speaker 1: The Panama Canal moves a total of roughly two hundreds 18 00:01:00,040 --> 00:01:03,880 Speaker 1: of any billion dollars worth of cargo annually, and forty 19 00:01:03,880 --> 00:01:07,199 Speaker 1: percent of all US container traffic travels through the canal. 20 00:01:07,520 --> 00:01:13,360 Speaker 1: But lately there's been a bit of a traffic jam. 21 00:01:13,680 --> 00:01:16,319 Speaker 1: Extremely low water levels in the canal have forced it 22 00:01:16,360 --> 00:01:19,240 Speaker 1: to limit the number of ships passing through. Peter Millard, 23 00:01:19,319 --> 00:01:22,720 Speaker 1: our senior correspondent in South America, recently went to Panama 24 00:01:22,760 --> 00:01:24,120 Speaker 1: to see the problem up close. 25 00:01:24,640 --> 00:01:28,720 Speaker 2: Normally they do thirty six to thirty eight vessels a 26 00:01:28,800 --> 00:01:32,360 Speaker 2: day through the canal. That's kind of the normal standard. 27 00:01:32,640 --> 00:01:35,280 Speaker 2: Right now they're at about twenty two to twenty four. 28 00:01:35,840 --> 00:01:38,600 Speaker 1: The Panama Canal uses three times as much water as 29 00:01:38,640 --> 00:01:41,360 Speaker 1: New York City in a single day. Ships need these 30 00:01:41,440 --> 00:01:43,880 Speaker 1: high volumes of water to be able to float efficiently 31 00:01:43,920 --> 00:01:46,559 Speaker 1: through the canal, and right now there's not enough water 32 00:01:46,760 --> 00:01:47,360 Speaker 1: for all of them. 33 00:01:47,800 --> 00:01:52,200 Speaker 2: The Panama Canal has been having troubles with water throughout 34 00:01:52,400 --> 00:01:56,400 Speaker 2: twenty twenty three, and in October the situation got a 35 00:01:56,400 --> 00:01:57,120 Speaker 2: bit more critical. 36 00:01:58,280 --> 00:02:00,560 Speaker 1: As the line of ships grows in the canal, the 37 00:02:00,560 --> 00:02:03,160 Speaker 1: consequences that this backlog could have for the global and 38 00:02:03,200 --> 00:02:06,840 Speaker 1: local economy grow too. On Today's show, What's happening to 39 00:02:06,880 --> 00:02:17,080 Speaker 1: the Panama Canal and can it be fixed? The Panama 40 00:02:17,120 --> 00:02:20,560 Speaker 1: Canal first opened in nineteen fourteen as a man made waterway. 41 00:02:20,680 --> 00:02:22,120 Speaker 1: It was a feat of engineering. 42 00:02:22,440 --> 00:02:25,240 Speaker 2: There's the Panama Canal from the underside. One of the 43 00:02:25,280 --> 00:02:27,640 Speaker 2: greatest pieces of man made construction ever known. 44 00:02:28,280 --> 00:02:31,680 Speaker 1: Creating it required cutting down a forest and damming up 45 00:02:31,720 --> 00:02:35,120 Speaker 1: water from nearby rivers. These rivers were then routed to 46 00:02:35,200 --> 00:02:38,360 Speaker 1: Lake Katoon, which is the main reservoir that feeds water 47 00:02:38,480 --> 00:02:41,760 Speaker 1: into the canal. When Peter went down to visit the canal, 48 00:02:41,919 --> 00:02:45,040 Speaker 1: he saw that the water levels at Lakatoon were incredibly low, 49 00:02:45,360 --> 00:02:48,040 Speaker 1: so low he could see the remains from the forest 50 00:02:48,160 --> 00:02:49,000 Speaker 1: that was once there. 51 00:02:49,360 --> 00:02:51,200 Speaker 2: You can see tree stumps coming out of the ground 52 00:02:51,400 --> 00:02:53,720 Speaker 2: just a few hundred feet from where the boats pass. 53 00:02:53,960 --> 00:02:55,120 Speaker 2: I look pretty out of place. 54 00:02:55,480 --> 00:02:57,440 Speaker 1: You can see the stumps poking up from the lake 55 00:02:57,480 --> 00:02:59,959 Speaker 1: at certain times of the year, like the dry season 56 00:03:00,160 --> 00:03:03,000 Speaker 1: around May, but Peter says seeing them at this time 57 00:03:03,080 --> 00:03:04,840 Speaker 1: of year is not normal. 58 00:03:05,680 --> 00:03:07,640 Speaker 2: This is November, at the end of the rainy season, 59 00:03:08,200 --> 00:03:09,400 Speaker 2: and they're not supposed to be there. 60 00:03:10,280 --> 00:03:12,480 Speaker 1: The low water level in the lake is happening for 61 00:03:12,520 --> 00:03:16,000 Speaker 1: a few reasons. Panama has been experiencing a drought that 62 00:03:16,080 --> 00:03:19,680 Speaker 1: has intensified with the Alminio climate phenomenon. The drought has 63 00:03:19,680 --> 00:03:23,480 Speaker 1: significantly reduced Panama's rainfall, which the canal's reservoirs rely on, 64 00:03:23,919 --> 00:03:26,560 Speaker 1: and the problem is being made worse by an expansion 65 00:03:26,600 --> 00:03:29,720 Speaker 1: of the canal that was completed in twenty sixteen. For 66 00:03:29,800 --> 00:03:32,720 Speaker 1: this expansion, the canal's authority added more slots to the 67 00:03:32,760 --> 00:03:35,840 Speaker 1: canal in order to accommodate more ships and bigger vessels. 68 00:03:36,120 --> 00:03:38,840 Speaker 1: Officials at the canal hope that this would bring more business, 69 00:03:39,200 --> 00:03:41,120 Speaker 1: but there was a big problem. 70 00:03:40,840 --> 00:03:43,880 Speaker 2: When they did that, they did not secure another source 71 00:03:44,200 --> 00:03:46,040 Speaker 2: of water to pump into the lake. 72 00:03:46,520 --> 00:03:49,200 Speaker 1: In other words, they invited more people to the party, 73 00:03:49,360 --> 00:03:52,640 Speaker 1: but forgot to buy the extra keg. Now the canal 74 00:03:52,760 --> 00:03:54,040 Speaker 1: is seeing the consequences. 75 00:03:54,320 --> 00:03:56,560 Speaker 2: So you had a really dry year, and also you 76 00:03:56,560 --> 00:04:01,000 Speaker 2: had the increased usage of the canal without enough water 77 00:04:01,080 --> 00:04:02,760 Speaker 2: on hand for it to function properly. 78 00:04:03,240 --> 00:04:06,240 Speaker 1: Without enough water, the Panama Canal Authority has been forced 79 00:04:06,280 --> 00:04:08,240 Speaker 1: to put in place the kind of restrictions we are 80 00:04:08,240 --> 00:04:10,800 Speaker 1: seeing now which limit the number of ships that can 81 00:04:10,840 --> 00:04:13,720 Speaker 1: pass through in a day. And these restrictions on how 82 00:04:13,720 --> 00:04:15,680 Speaker 1: many ships can go through, I mean all of them 83 00:04:15,760 --> 00:04:17,960 Speaker 1: have to wait longer. So the stuff on these cargo 84 00:04:18,040 --> 00:04:20,599 Speaker 1: ships is taking longer to reach its destination. 85 00:04:20,960 --> 00:04:23,560 Speaker 2: Longer is to get the products to market. 86 00:04:23,240 --> 00:04:25,200 Speaker 1: Which can be a real problem if the ship is 87 00:04:25,240 --> 00:04:27,760 Speaker 1: carrying something like fruit that needs to be shipped out 88 00:04:27,800 --> 00:04:30,280 Speaker 1: at a certain time of year, and so to help 89 00:04:30,320 --> 00:04:33,000 Speaker 1: with this, the canal authority came up with a band 90 00:04:33,000 --> 00:04:35,719 Speaker 1: aid solution to charge ships that wanted to cross the 91 00:04:35,720 --> 00:04:39,599 Speaker 1: canal faster an expedited fee. In November, we reported that 92 00:04:39,640 --> 00:04:42,120 Speaker 1: shipping companies have paid a total of two hundred and 93 00:04:42,160 --> 00:04:45,320 Speaker 1: thirty five million dollars in these expedited fees, and the 94 00:04:45,320 --> 00:04:48,880 Speaker 1: clients that are paying the most are petroleum and gas producers. 95 00:04:49,440 --> 00:04:51,719 Speaker 2: The thing is they have to pay a huge fine 96 00:04:52,240 --> 00:04:56,760 Speaker 2: if they reached their client late, and so they've decided that, okay, 97 00:04:56,880 --> 00:04:58,800 Speaker 2: well just going to pay whatever we have to. They 98 00:04:58,800 --> 00:05:01,039 Speaker 2: are the clients that are been paying them most to 99 00:05:01,120 --> 00:05:02,080 Speaker 2: jump in line. 100 00:05:02,279 --> 00:05:05,840 Speaker 1: But this is not a sustainable solution. Some shippers who 101 00:05:05,839 --> 00:05:07,919 Speaker 1: aren't willing or able to pay to jump the line 102 00:05:07,960 --> 00:05:10,640 Speaker 1: are already moving their cargo to other routes. They're now 103 00:05:10,680 --> 00:05:13,719 Speaker 1: sending their ships around the southern tips of Africa and 104 00:05:13,800 --> 00:05:16,920 Speaker 1: South America or through the busy Suez Canal. These other 105 00:05:17,000 --> 00:05:20,800 Speaker 1: routes take longer, and at the Suez there are security concerns, 106 00:05:21,200 --> 00:05:23,520 Speaker 1: But with these kind of delays at the Panama Canal, 107 00:05:23,839 --> 00:05:26,480 Speaker 1: shippers are increasingly willing to look for other ways to go, 108 00:05:27,160 --> 00:05:29,360 Speaker 1: and if fewer and fewer ships go through the canal, 109 00:05:29,600 --> 00:05:32,200 Speaker 1: that is a real problem for Panama. The canal is 110 00:05:32,240 --> 00:05:34,920 Speaker 1: Panama's biggest source of revenue, bringing in four point three 111 00:05:34,920 --> 00:05:38,120 Speaker 1: billion dollars in twenty twenty two and thousands of jobs. 112 00:05:38,480 --> 00:05:41,040 Speaker 2: They said, the most recent fiscal year probably like a 113 00:05:41,120 --> 00:05:44,080 Speaker 2: half a billion dollars less in revenue than the previous 114 00:05:44,080 --> 00:05:44,760 Speaker 2: fiscal year. 115 00:05:46,600 --> 00:05:49,960 Speaker 1: After the break, Panama looks to longer term solutions for 116 00:05:50,040 --> 00:05:52,560 Speaker 1: fixing the canal, then finds other challenges. 117 00:05:52,800 --> 00:05:55,080 Speaker 2: There's about ten thousand people that live in the area 118 00:05:55,200 --> 00:05:56,400 Speaker 2: that they want to flood. 119 00:05:57,120 --> 00:06:03,320 Speaker 1: We'll be right back. Hey, we're back. Before the break, 120 00:06:03,440 --> 00:06:05,640 Speaker 1: my colleague Peter Millard was telling us about how the 121 00:06:05,640 --> 00:06:08,599 Speaker 1: low water levels have created a crisis in the Panama Canal. 122 00:06:09,320 --> 00:06:11,800 Speaker 1: This is frustrated shipping companies to the point where they 123 00:06:11,800 --> 00:06:14,560 Speaker 1: are returning to older routes or paying millions of dollars 124 00:06:14,600 --> 00:06:17,800 Speaker 1: in expedited fees. As we enter twenty twenty four, I 125 00:06:17,839 --> 00:06:20,440 Speaker 1: asked Peter if there are other more long term solutions 126 00:06:20,440 --> 00:06:22,800 Speaker 1: on the table, and he told me that the idea 127 00:06:22,839 --> 00:06:25,440 Speaker 1: that seems most possible seems to be creating a brand 128 00:06:25,440 --> 00:06:28,720 Speaker 1: new reservoir for the canal. For this canal, authorities have 129 00:06:28,800 --> 00:06:32,200 Speaker 1: eyed the Indio River. The project would involve damming up 130 00:06:32,200 --> 00:06:34,680 Speaker 1: the river and then drilling a tunnel through a mountain 131 00:06:34,800 --> 00:06:37,040 Speaker 1: to connect it to the canal. It's a process that 132 00:06:37,080 --> 00:06:39,479 Speaker 1: looks a lot like how the canal was created in 133 00:06:39,480 --> 00:06:42,640 Speaker 1: the first place, by modifying the land and allowing the 134 00:06:42,680 --> 00:06:46,039 Speaker 1: water to break in flooding the area. The problem is 135 00:06:46,600 --> 00:06:48,440 Speaker 1: that there's already people living there. 136 00:06:48,640 --> 00:06:51,160 Speaker 2: There's about ten thousand people live in the area that 137 00:06:51,360 --> 00:06:52,240 Speaker 2: they want to flood. 138 00:06:52,560 --> 00:06:55,560 Speaker 1: When visiting the community near the Indio River, Peter met 139 00:06:55,600 --> 00:06:56,720 Speaker 1: Elizabeth Delgado. 140 00:06:57,200 --> 00:07:01,839 Speaker 2: She lives on the access road to the Indio River 141 00:07:02,160 --> 00:07:04,360 Speaker 2: and she's like kind of like the closest house to 142 00:07:04,400 --> 00:07:06,240 Speaker 2: the river, so she would be one of the first 143 00:07:06,279 --> 00:07:09,279 Speaker 2: people to get flooded. And she lives out there with 144 00:07:09,320 --> 00:07:15,559 Speaker 2: their family. They farm rice, they farm planting casava. She says, Okay, 145 00:07:15,560 --> 00:07:17,440 Speaker 2: we're set up. We can kind of live off of 146 00:07:17,560 --> 00:07:21,000 Speaker 2: what we produce here, and you know, this is how 147 00:07:21,040 --> 00:07:21,880 Speaker 2: we know how to live. 148 00:07:22,240 --> 00:07:24,720 Speaker 1: And Elizabeth, of course is not the only one in 149 00:07:24,760 --> 00:07:26,160 Speaker 1: her community who is concerned. 150 00:07:26,560 --> 00:07:29,040 Speaker 2: The people that live alongside the lake, they don't want 151 00:07:29,080 --> 00:07:33,160 Speaker 2: to move. They're already polding community meetings and figuring out 152 00:07:33,320 --> 00:07:34,680 Speaker 2: how they're going to oppose this. 153 00:07:35,240 --> 00:07:38,240 Speaker 1: Canal officials are aware of the tension that this creates, 154 00:07:38,480 --> 00:07:41,200 Speaker 1: but this is the primary solution being looked at to 155 00:07:41,240 --> 00:07:42,640 Speaker 1: combat the low water levels. 156 00:07:42,920 --> 00:07:46,560 Speaker 2: I went to meet with Eric Cordoba, you know, that 157 00:07:46,720 --> 00:07:50,200 Speaker 2: was at the headquarters for the Panama Canal Authority. 158 00:07:50,400 --> 00:07:52,560 Speaker 1: Eric is the head of the water division at the canal. 159 00:07:52,800 --> 00:07:54,840 Speaker 2: You walk in the main entrance and they have the 160 00:07:54,880 --> 00:07:57,080 Speaker 2: first bell from the first boat that went through the 161 00:07:57,080 --> 00:08:03,480 Speaker 2: canal back in nineteen fourteen Brazil. 162 00:08:10,320 --> 00:08:12,800 Speaker 1: He says that they will need everyone to agree in 163 00:08:12,880 --> 00:08:16,000 Speaker 1: order for the project to gain government approval, and so. 164 00:08:16,080 --> 00:08:17,800 Speaker 2: You know, they can do the engineering, but they can't 165 00:08:17,800 --> 00:08:19,080 Speaker 2: do the politics behind it. 166 00:08:20,200 --> 00:08:24,360 Speaker 1: In the meantime, other decidedly more experimental measures are being 167 00:08:24,400 --> 00:08:28,840 Speaker 1: taken to bring more water into the canal, like creating clouds. 168 00:08:29,280 --> 00:08:32,120 Speaker 2: These are desperate times for Panama, and so they're looking 169 00:08:32,120 --> 00:08:35,199 Speaker 2: into desperate measures. As a company based in North Dakota 170 00:08:35,240 --> 00:08:38,240 Speaker 2: that does cloud seating, a test airplane went down there 171 00:08:38,240 --> 00:08:38,840 Speaker 2: in November. 172 00:08:39,360 --> 00:08:43,199 Speaker 1: Cloud seating is a technology that's been around for decades, but. 173 00:08:43,480 --> 00:08:48,480 Speaker 2: Where it's used and been used successfully are in very 174 00:08:48,559 --> 00:08:52,440 Speaker 2: dry climates, so it's not something that has been deployed 175 00:08:52,440 --> 00:08:55,040 Speaker 2: in the tropics like what they're trying to do in Panama. 176 00:08:55,160 --> 00:08:58,240 Speaker 1: But whether it's through expanding the Indio River or creating 177 00:08:58,280 --> 00:09:00,920 Speaker 1: more clouds, the canal authority need to come up with 178 00:09:01,000 --> 00:09:04,920 Speaker 1: something because the situation in Panama has become increasingly urgent 179 00:09:05,160 --> 00:09:06,680 Speaker 1: and shippers are getting impatient. 180 00:09:07,080 --> 00:09:09,960 Speaker 2: A miracle could come, but that won't be lasting. We've 181 00:09:09,960 --> 00:09:12,800 Speaker 2: seen more and Nino events, and if you look at 182 00:09:12,840 --> 00:09:15,920 Speaker 2: the climate models for Central America, it's expected to get 183 00:09:16,000 --> 00:09:18,720 Speaker 2: drier over the course of this century, and so everything 184 00:09:18,760 --> 00:09:23,120 Speaker 2: points to more problems. The solution is political more than technical, 185 00:09:23,640 --> 00:09:26,240 Speaker 2: and then that's the decision that Panamanians need to make. 186 00:09:26,280 --> 00:09:28,360 Speaker 2: Do they want to flood another part of their country 187 00:09:28,720 --> 00:09:32,720 Speaker 2: to be able to keep this main industry operating a capacity. 188 00:09:33,080 --> 00:09:34,920 Speaker 2: That's the decision that the country has to make. 189 00:09:37,480 --> 00:09:40,000 Speaker 1: Thanks for listening to the Big Take from Bloomberg News. 190 00:09:40,240 --> 00:09:44,000 Speaker 1: I'm Sarah Holder. This episode was produced by Adrianna Tapia. 191 00:09:44,240 --> 00:09:47,320 Speaker 1: It was edited by Caitlin Kenney. Our senior producers are 192 00:09:47,400 --> 00:09:50,920 Speaker 1: Jilda Di Carli and Naomi Shadan. We get editorial direction 193 00:09:51,120 --> 00:09:54,959 Speaker 1: from Elizabeth Ponso. It was fact checked by Summersati. It 194 00:09:55,120 --> 00:09:58,960 Speaker 1: was mixed by Alex Sugira. Sage Bauman is our executive 195 00:09:58,960 --> 00:10:02,000 Speaker 1: producer and head of Pop Podcasts. Thanks for tuning in, 196 00:10:02,400 --> 00:10:03,720 Speaker 1: We'll be back next week.