Panama Canal Faces Unprecedented Chaos Due to Drought

France first attempted to build the Panama Canal in the late 1800s but failed. At the time, France chose to excavate at sea level, similar to the Suez Canal, but overlooked local characteristics such as a long rainy season from May to December and weak ground. Repeated collapses during construction led to significant casualties, including the deaths of approximately 20,000 laborers, eventually forcing them to give up.

In 1907, Mexico attempted to replace the need for the Panama Canal by linking land transport routes using railways. However, this method proved less useful than expected. The essential purpose of the Panama Canal became even more prominent, especially with the emergence of strategic needs such as moving warships to the US West Coast.

The Panama Canal is designed with a lock system that consumes approximately 200 million liters of freshwater each time a ship passes through. This amount of water is equivalent to the daily water supply for the entire population of Jeonju. Assuming an average of 36 ships pass through daily, it means the amount of water used by the Seoul population over 2.5 days flows into the sea in just one day.

Even though sea-level construction was the prevailing opinion at the time, they decided to switch to a lock system based on actual experience. During this process, an artificial Gatun Lake was created to secure the freshwater needed for canal operations.

While droughts were rare in the past, recent El Niño and climate change impacts have led to recurring droughts every 2-3 years. The water in Gatun Lake, critical for Panama Canal operations, is also the primary water source for over 50% of Panama's population for drinking. This creates a conflict in prioritizing water usage between ships transiting the canal and securing drinking water for the Panamanian people, leading to an unavoidable situation where canal transit numbers must be restricted to ensure drinking water supply.

Regular transit slots for the Panama Canal require a basic reservation fee of $100,000 and are preferentially allocated to vessels with high usage records. However, problems arise when all slots are booked, at which point an auction system called 'Magic Pass' is introduced. Additionally, various criteria are applied, such as granting priority to vessels that fail to secure a slot for two consecutive days.

The ship, despite being empty, paid this enormous sum to pass through the canal without a day's delay. This case clearly illustrates the urgent need to transport US LPG as quickly as possible, indicating that the losses incurred from delays would be far greater than the auction cost.

Hyundai Glovis anticipates a 15% reduction in logistics costs through a trial operation there in 2025. However, cargo volume is still very minimal, making it difficult to fully replace the Panama Canal. Shippers have low preference due to concerns about train derailments and cargo damage, and it is expected to become a practical alternative only when infrastructure is fully established around 2033.

Built in the 1990s as a joint venture between a US company and the Panamanian government, this pipeline has the capacity to transport approximately 860,000 barrels of crude oil per day. This provides a route for crude oil to be transported directly overland without passing through the canal. The Panamanian government has already notified its intention to reclaim the 40% stake held by the US company to strengthen its control over the pipeline's operations. This pipeline is considered an important alternative, especially in preparation for potential disruptions in crude oil transportation due to instability in the Middle East. The Panamanian government's efforts to secure its stake reflect national goals of energy security and reducing dependence on the canal. In the long term, this pipeline could help alleviate the Panama Canal's overload and improve the efficiency of specific cargo transportation.