The Panama Canal, an essential route for global marine trade, is experiencing significant disruption owing to record low water levels caused by the greatest drought in its 143-year history. Due to low rainfall at Gatn Lake, constraints have led in a significant 15 million-ton reduction in throughput this year, causing ships to spend an additional six days in transit.
The disruption is not limited to Panama; ports in Nicaragua, Ecuador, Peru, El Salvador, and Jamaica have experienced trade flow disruptions ranging from 10% to 25%, with ramifications extending to Asia, Europe, and North America.
In a broader sense, this disruption serves as a sharp reminder of the increasing frequency of climate-related occurrences around the world, such as droughts, floods, and tropical storms, which pose a serious threat to maritime infrastructure. In response to these issues, IMF and University of Oxford researchers unveiled PortWatch, an innovative tool that uses real-time satellite data to track 99% of global maritime traffic. PortWatch analyses daily trade flows at 1,400 ports and simulates international spillovers from port closures.
Notably, it allows policymakers to analyze climate scenarios, providing risk assessments for various climatic extremes, and delivering alerts on possible and actual trade disruptions in the aftermath of big catastrophes. This project stresses the importance of being proactive in navigating the impact of climate change on the complex web of global trade.
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Technology is a useful servant, but a dangerous master, it was rightly said. Electronic devices have grown into an inevitable part of our daily lives.
