By Jennifer Chang      Photo：Michael D. Camphin

The Panama Canal is a 50-mile-long waterway located in the Isthmus of Panama, connecting the Atlantic and Pacific Oceans. It was completed in 1914, representing a monumental engineering feat and providing a crucial shortcut for ships traveling between North and South America. The canal consists of a series of locks and a large artificial lake, relying on these facilities to regulate water levels and ensure smooth passage for vessels. In particular, Gatun Lake plays a vital role in maintaining the canal's normal water levels. The strategic geographical position of the Panama Canal makes it a linchpin of international commerce and global trade. Transporting goods through the canal significantly reduces the sailing distance and costs for ships, expediting the speed of cargo transportation. As a result, many large cargo vessels and commercial ships pass through the Panama Canal each year, making it an indispensable part of the global economy.

Recently, the Panama Canal has been facing a challenge of decreasing water levels, posing a threat to its continuous and efficient operation. Severe droughts in recent years have led to a drop in the water levels of Gatun Lake. As a result, canal authorities have been compelled to restrict the number of vessels passing through the canal each day to ensure its sustainable operation and stabilize the water levels. The demand for global trade has led to an increase in traffic through the canal. Larger vessels, such as the new generation of Panamax ships, require more water to pass through the locks, further depleting the canal's resources. With the declining water levels, the Panama Canal Authority has had to impose weight and size restrictions on vessels, limiting the canal's capacity to accommodate large ships.

The recent news of consecutive blockages at the Panama Canal has garnered widespread attention in the global logistics industry. Faced with the congestion at the canal, there has been a surge in the use of air freight as an alternative to sea freight. The peak season for air cargo has arrived earlier than usual. Due to a shortage of water in the Panama Canal, ships are queuing up to pass through, leading to fluctuations in the time required for maritime transport. On the US East Coast route, there is now a shortage of containers, prompting some to switch to air freight, reminiscent of the rush for goods during the initial stages of the pandemic. The situation at the Panama Canal is more severe than anticipated, exacerbated by the absence of rainfall. Some vessels have already begun to seek alternative routes. It is reported that on both ends of the Panama Canal, there are over 150 ships queuing daily to cross the waterway. Even for container ships that have reserved the right to cross, the waiting time is extended by 7 to 8 hours compared to normal, due to congested maritime traffic. Currently, the average sea freight time from Asia to New York is approximately 45 days. With additional processes like container retrieval, any delays could jeopardize the opportunity to capture the holiday season market. In response to the impact of the pandemic over the past two years, many have started to opt for air freight for certain portions of their cargo. The air freight journey from Asia to New York takes only one day, with additional airport procedures requiring a total of two days for delivery. In this scenario, air freight has become the alternative of choice for many businesses. Compared to sea freight, air cargo offers a significantly shorter transit time, ensuring rapid delivery to the destination. This is especially crucial for urgent orders with time-sensitive requirements, where switching to air freight better caters to customer needs. As a result of the shift from sea to air freight, the air cargo market has suddenly experienced an influx of demand, leading to a surge in air freight rates. This sea-to-air shift has brought about significant changes in the air cargo market.

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