(Reuters) – A.P. Moller-Maersk (MAERSKb.CO) will use trains to avoid the drought-hit Panama Canal for some of its vessels, the Danish shipping giant said as low water levels have caused one of the world’s main maritime trade routes to reduce crossings.
The workaround comes as vessel owners also are rerouting ships to avoid militant attacks that are disrupting the Suez Canal, its longtime rival trade shortcut, in what has become the largest disruption to ocean shipping since the COVID-19 pandemic.
The Panama Canal Authority has reduced the amount and weight of vessels passing through based on current and projected water levels in Gatun Lake, the rainfall-fed principal reservoir that floats ships through the canal’s lock system, said Maersk, one of the world’s largest container shipping companies.
The Panama Canal Railway is a 47-mile (76-km) railroad running adjacent to the canal that connects the Atlantic and Pacific oceans.
It was already being used by Maersk and other shipowners to temporarily offload container weight from large ships before passing through the waterway to adhere to drought-related draft restrictions.
“The vessels that utilised the Panama Canal before will now omit the Panama Canal and use a ‘land bridge’ that utilises rail to transport cargo across,” the firm said in an advisory to its customers.
The company’s OC1 service, connecting Australia and New Zealand with the U.S. East Coast cities of Philadelphia and Charleston, South Carolina, via the Panama Canal, will now create two separate loops, one Atlantic and one Pacific.
“The OC1 service omitting the Panama Canal would be two transits per week,” a Maersk spokesperson said, adding that all other Maersk services continue as planned through the Canal.
Panama’s drought, worsened by the El Nino weather phenomenon, has decreased transit slots at the canal, already forcing fuel tankers and grain shippers to take longer routes to avoid congestion.
Maersk added that the rerouting could lead to some delays for southbound vessels, while it saw no delays to cargo stopping in Philadelphia and Charleston.
Cargo en route to Cartagena, Colombia, would be served by “alternate vessels”, it said in its statement.
The drought adds further disruption to the global shipping network as companies like Maersk and Hapag Lloyd (HLAG.DE) are switching away from the Red Sea after Iranian-backed Houthi militants in Yemen stepped up attacks on vessels in the Gulf region.
Global trade declined by 1.3% from November to December 2023 as the Red Sea attacks led to a drop in the volumes of cargo transported in that key region, a German economic institute said on Thursday.
French shipping rival CMA CGM said in November that reduced transit slots at the Panama Canal, together with an increase in the canal tariff earlier in the year, were “taking a severe toll” on its operations.
CMA CGM at the time added that it would start applying a $150 “Panama Adjustment Factor” per twenty-foot equivalent unit (TEU) from Jan. 1 this year. The French company not immediately respond to a request for comment on Thursday.
Hapag Lloyd said it will not follow Maersk using rail to get goods through the Panama canal, saying it used larger ships of up to 13,000 TEU, for which there isn’t enough rail capacity.
The group said the only planned change was to let its EC2 service, which links Asia with North America, run via the Panama Canal again after it was rerouted via the Cape of Good Hope.
The Panama Canal Railway Co is jointly owned by Canadian Pacific Kansas City (CP.TO) railway and Mi-Jack Products and leased to Panama.
