The cost of shipping fuels such as diesel across the Atlantic has soared to an almost 16-month high amid ongoing disruption at the Panama Canal, Bloomberg News reported. Shipping through the vital waterway — a shortcut between the Atlantic and Pacific oceans — has suffered as an El Nino-fueled drought reduced water levels to an unprecedented low. That’s prompting shipping companies to pay large sums to jump ahead in queues or sail thousands of extra miles around South America.
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Panama
For over a century, the Panama Canal has provided a convenient way for ships to move between the Pacific and Atlantic Oceans, helping to speed up international trade. But a drought has left the canal without enough water, which is used to raise and lower ships, forcing officials to slash the number of vessels they allow through. That has created expensive headaches for shipping companies and raised difficult questions about water use in Panama, the New York Times reported. The passage of one ship is estimated to consume as much water as half a million Panamanians use in one day.
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The operator of the Panama Canal said there’s no immediate prospect of relief from the drought that’s reduced water levels and snarled shipping and global supply chains, Bloomberg News reported. Panama Canal Administrator Ricaurte Vásquez Morales said Tuesday that abnormally high ocean temperatures, an unpredictable rainy season and the persistence of the El Niño weather phenomenon mean officials will have to continue restricting vessel traffic into 2024.
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The Panama Canal is, in many ways, the Panama economy. It hands over about $1 out of every $4 the government takes in, generating a constant stream of cash that flows through all corners of the small country. So when dozens of container ships began backing up outside the canal recently, the result of a drought so fierce that water levels have plunged to dangerously low levels, it got the attention of traders on Wall Street, Bloomberg News reported. For days, they’ve sold Panamanian government bonds, making them one of the worst performers in Latin America.
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Panama's economic recovery has been "very strong," but the outlook remains uncertain as growth is projected to slow to 5% this year, the International Monetary Fund (IMF) said Friday, Reuters reported. Panama faces risks of new external shocks as well as potential disruptions to copper mining after delays reaching a renewed agreement with Minera Panama, the IMF said. Canadian miner First Quantum owns a 90% interest in the Cobre Panama mine through its unit Minera Panama. Panama's inclusion on the Financial Action Task Force grey list also poses risks.
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The Panamanian attorney general’s office will ask a judge to order Odebrecht to pay fines due in 2019 and 2020 after the corruption-ensnared Brazilian conglomerate failed to pay, prosecutor Anilu Batista said on Friday, Reuters reported. Panamanian authorities fined Odebrecht in 2017 for paying bribes in exchange for construction contracts in the Central American country. The company owes more than $35.5 million, a judicial source at the attorney general’s office said. Odebrecht did not immediately respond to a request for comment.
Panama’s Copa Airlines on Wednesday reported that it earned almost no income between April and June, with revenue falling 98% as coronavirus-related measures virtually shuttered the Panama City airport that serves as its home base, Reuters reported. Panama’s tough anti-coronavirus measures, including a travel ban that will go at least through August, has also become a radical test of Copa’s resilience. In normal times, Copa is considered Latin America’s most financially successful airline, known for steady profits, low debt and a strong cash position.
Prime Minister Stephen Harper is showing little inclination to intervene in the sale of Nortel's prime assets to a foreign buyer, saying he is reluctant to erect protectionist barriers in Canada while preaching the benefits of freer trade in the Americas, The Globe and Mail reported. Mr. Harper rejected a call from Research In Motion Ltd. for the government to simply block the sale of Nortel Networks Corp.'s wireless assets to Ericsson for $1.13-billion, but left open the prospect of a review under the Investment Canada Act.
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Ecuador’s default on $3.9 billion of international bonds means it’s only a matter of time before the country drops the U.S. dollar as its currency, Goldman Sachs Group has said, Bloomberg reported. Ecuador’s use of the dollar gives President Rafael Correa no outlet for providing credit to the economy as access to foreign financing dries up and revenue from sales of oil, the nation’s biggest export, tumbles.
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