Speaker 1: Hi, I'm Sarah Holder. I'm a new host for The
Speaker 1: Big Take, and I'm thrilled to be in your feed
Speaker 1: this week along with Salaiah Mosen in Washington, d C.
Speaker 1: And Juanha in Hong Kong. Each day we'll share one
Speaker 1: big story on money from all around the world. Today,
Speaker 1: we travel to Panama, specifically to the Panama Canal. The
Speaker 1: Panama Canal is an artificial waterway that connects the Atlantic
Speaker 1: Ocean with the Pacific Ocean. It cuts right through the
Speaker 1: middle of Panama, and for more than a century it's
Speaker 1: been one of the main routes for global trade. And
Speaker 1: almost everything that touches our lives have one thing in common.
Speaker 2: It comes through the Panama Canal.
Speaker 1: And when they say almost everything that touches our lives,
Speaker 1: they mean everything.
Speaker 2: Cars, refrigerators. You have a lot of produce coming from
Speaker 2: South America, from Chile, Peru that uses the canal.
Speaker 1: The Panama Canal moves a total of roughly two hundreds
Speaker 1: of any billion dollars worth of cargo annually, and forty
Speaker 1: percent of all US container traffic travels through the canal.
Speaker 1: But lately there's been a bit of a traffic jam.
Speaker 1: Extremely low water levels in the canal have forced it
Speaker 1: to limit the number of ships passing through. Peter Millard,
Speaker 1: our senior correspondent in South America, recently went to Panama
Speaker 1: to see the problem up close.
Speaker 2: Normally they do thirty six to thirty eight vessels a
Speaker 2: day through the canal. That's kind of the normal standard.
Speaker 2: Right now they're at about twenty two to twenty four.
Speaker 1: The Panama Canal uses three times as much water as
Speaker 1: New York City in a single day. Ships need these
Speaker 1: high volumes of water to be able to float efficiently
Speaker 1: through the canal, and right now there's not enough water
Speaker 1: for all of them.
Speaker 2: The Panama Canal has been having troubles with water throughout
Speaker 2: twenty twenty three, and in October the situation got a
Speaker 2: bit more critical.
Speaker 1: As the line of ships grows in the canal, the
Speaker 1: consequences that this backlog could have for the global and
Speaker 1: local economy grow too. On Today's show, What's happening to
Speaker 1: the Panama Canal and can it be fixed? The Panama
Speaker 1: Canal first opened in nineteen fourteen as a man made waterway.
Speaker 1: It was a feat of engineering.
Speaker 2: There's the Panama Canal from the underside. One of the
Speaker 2: greatest pieces of man made construction ever known.
Speaker 1: Creating it required cutting down a forest and damming up
Speaker 1: water from nearby rivers. These rivers were then routed to
Speaker 1: Lake Katoon, which is the main reservoir that feeds water
Speaker 1: into the canal. When Peter went down to visit the canal,
Speaker 1: he saw that the water levels at Lakatoon were incredibly low,
Speaker 1: so low he could see the remains from the forest
Speaker 1: that was once there.
Speaker 2: You can see tree stumps coming out of the ground
Speaker 2: just a few hundred feet from where the boats pass.
Speaker 2: I look pretty out of place.
Speaker 1: You can see the stumps poking up from the lake
Speaker 1: at certain times of the year, like the dry season
Speaker 1: around May, but Peter says seeing them at this time
Speaker 1: of year is not normal.
Speaker 2: This is November, at the end of the rainy season,
Speaker 2: and they're not supposed to be there.
Speaker 1: The low water level in the lake is happening for
Speaker 1: a few reasons. Panama has been experiencing a drought that
Speaker 1: has intensified with the Alminio climate phenomenon. The drought has
Speaker 1: significantly reduced Panama's rainfall, which the canal's reservoirs rely on,
Speaker 1: and the problem is being made worse by an expansion
Speaker 1: of the canal that was completed in twenty sixteen. For
Speaker 1: this expansion, the canal's authority added more slots to the
Speaker 1: canal in order to accommodate more ships and bigger vessels.
Speaker 1: Officials at the canal hope that this would bring more business,
Speaker 1: but there was a big problem.
Speaker 2: When they did that, they did not secure another source
Speaker 2: of water to pump into the lake.
Speaker 1: In other words, they invited more people to the party,
Speaker 1: but forgot to buy the extra keg. Now the canal
Speaker 1: is seeing the consequences.
Speaker 2: So you had a really dry year, and also you
Speaker 2: had the increased usage of the canal without enough water
Speaker 2: on hand for it to function properly.
Speaker 1: Without enough water, the Panama Canal Authority has been forced
Speaker 1: to put in place the kind of restrictions we are
Speaker 1: seeing now which limit the number of ships that can
Speaker 1: pass through in a day. And these restrictions on how
Speaker 1: many ships can go through, I mean all of them
Speaker 1: have to wait longer. So the stuff on these cargo
Speaker 1: ships is taking longer to reach its destination.
Speaker 2: Longer is to get the products to market.
Speaker 1: Which can be a real problem if the ship is
Speaker 1: carrying something like fruit that needs to be shipped out
Speaker 1: at a certain time of year, and so to help
Speaker 1: with this, the canal authority came up with a band
Speaker 1: aid solution to charge ships that wanted to cross the
Speaker 1: canal faster an expedited fee. In November, we reported that
Speaker 1: shipping companies have paid a total of two hundred and
Speaker 1: thirty five million dollars in these expedited fees, and the
Speaker 1: clients that are paying the most are petroleum and gas producers.
Speaker 2: The thing is they have to pay a huge fine
Speaker 2: if they reached their client late, and so they've decided that, okay,
Speaker 2: well just going to pay whatever we have to. They
Speaker 2: are the clients that are been paying them most to
Speaker 2: jump in line.
Speaker 1: But this is not a sustainable solution. Some shippers who
Speaker 1: aren't willing or able to pay to jump the line
Speaker 1: are already moving their cargo to other routes. They're now
Speaker 1: sending their ships around the southern tips of Africa and
Speaker 1: South America or through the busy Suez Canal. These other
Speaker 1: routes take longer, and at the Suez there are security concerns,
Speaker 1: But with these kind of delays at the Panama Canal,
Speaker 1: shippers are increasingly willing to look for other ways to go,
Speaker 1: and if fewer and fewer ships go through the canal,
Speaker 1: that is a real problem for Panama. The canal is
Speaker 1: Panama's biggest source of revenue, bringing in four point three
Speaker 1: billion dollars in twenty twenty two and thousands of jobs.
Speaker 2: They said, the most recent fiscal year probably like a
Speaker 2: half a billion dollars less in revenue than the previous
Speaker 2: fiscal year.
Speaker 1: After the break, Panama looks to longer term solutions for
Speaker 1: fixing the canal, then finds other challenges.
Speaker 2: There's about ten thousand people that live in the area
Speaker 2: that they want to flood.
Speaker 1: We'll be right back. Hey, we're back. Before the break,
Speaker 1: my colleague Peter Millard was telling us about how the
Speaker 1: low water levels have created a crisis in the Panama Canal.
Speaker 1: This is frustrated shipping companies to the point where they
Speaker 1: are returning to older routes or paying millions of dollars
Speaker 1: in expedited fees. As we enter twenty twenty four, I
Speaker 1: asked Peter if there are other more long term solutions
Speaker 1: on the table, and he told me that the idea
Speaker 1: that seems most possible seems to be creating a brand
Speaker 1: new reservoir for the canal. For this canal, authorities have
Speaker 1: eyed the Indio River. The project would involve damming up
Speaker 1: the river and then drilling a tunnel through a mountain
Speaker 1: to connect it to the canal. It's a process that
Speaker 1: looks a lot like how the canal was created in
Speaker 1: the first place, by modifying the land and allowing the
Speaker 1: water to break in flooding the area. The problem is
Speaker 1: that there's already people living there.
Speaker 2: There's about ten thousand people live in the area that
Speaker 2: they want to flood.
Speaker 1: When visiting the community near the Indio River, Peter met
Speaker 1: Elizabeth Delgado.
Speaker 2: She lives on the access road to the Indio River
Speaker 2: and she's like kind of like the closest house to
Speaker 2: the river, so she would be one of the first
Speaker 2: people to get flooded. And she lives out there with
Speaker 2: their family. They farm rice, they farm planting casava. She says, Okay,
Speaker 2: we're set up. We can kind of live off of
Speaker 2: what we produce here, and you know, this is how
Speaker 2: we know how to live.
Speaker 1: And Elizabeth, of course is not the only one in
Speaker 1: her community who is concerned.
Speaker 2: The people that live alongside the lake, they don't want
Speaker 2: to move. They're already polding community meetings and figuring out
Speaker 2: how they're going to oppose this.
Speaker 1: Canal officials are aware of the tension that this creates,
Speaker 1: but this is the primary solution being looked at to
Speaker 1: combat the low water levels.
Speaker 2: I went to meet with Eric Cordoba, you know, that
Speaker 2: was at the headquarters for the Panama Canal Authority.
Speaker 1: Eric is the head of the water division at the canal.
Speaker 2: You walk in the main entrance and they have the
Speaker 2: first bell from the first boat that went through the
Speaker 2: canal back in nineteen fourteen Brazil.
Speaker 1: He says that they will need everyone to agree in
Speaker 1: order for the project to gain government approval, and so.
Speaker 2: You know, they can do the engineering, but they can't
Speaker 2: do the politics behind it.
Speaker 1: In the meantime, other decidedly more experimental measures are being
Speaker 1: taken to bring more water into the canal, like creating clouds.
Speaker 2: These are desperate times for Panama, and so they're looking
Speaker 2: into desperate measures. As a company based in North Dakota
Speaker 2: that does cloud seating, a test airplane went down there
Speaker 2: in November.
Speaker 1: Cloud seating is a technology that's been around for decades, but.
Speaker 2: Where it's used and been used successfully are in very
Speaker 2: dry climates, so it's not something that has been deployed
Speaker 2: in the tropics like what they're trying to do in Panama.
Speaker 1: But whether it's through expanding the Indio River or creating
Speaker 1: more clouds, the canal authority need to come up with
Speaker 1: something because the situation in Panama has become increasingly urgent
Speaker 1: and shippers are getting impatient.
Speaker 2: A miracle could come, but that won't be lasting. We've
Speaker 2: seen more and Nino events, and if you look at
Speaker 2: the climate models for Central America, it's expected to get
Speaker 2: drier over the course of this century, and so everything
Speaker 2: points to more problems. The solution is political more than technical,
Speaker 2: and then that's the decision that Panamanians need to make.
Speaker 2: Do they want to flood another part of their country
Speaker 2: to be able to keep this main industry operating a capacity.
Speaker 2: That's the decision that the country has to make.
Speaker 1: Thanks for listening to the Big Take from Bloomberg News.
Speaker 1: I'm Sarah Holder. This episode was produced by Adrianna Tapia.
Speaker 1: It was edited by Caitlin Kenney. Our senior producers are
Speaker 1: Jilda Di Carli and Naomi Shadan. We get editorial direction
Speaker 1: from Elizabeth Ponso. It was fact checked by Summersati. It
Speaker 1: was mixed by Alex Sugira. Sage Bauman is our executive
Speaker 1: producer and head of Pop Podcasts. Thanks for tuning in,
Speaker 1: We'll be back next week.