El Nino Takes a Large Gulp out of the Panama Canal

Ready for one more example of El Nio's impact on the world?

The weather phenomenon caused by a periodic rise in temperature of Pacific Ocean waters is playing tricks on world trade - by causing a drought in Panama. The lack of rain is forcing a reduction in the allowable draft of cargo ships passing through the canal. And that means less grain per ship from the US to China, fewer VCRs from Japan to Texas.

With rainfall 35 percent below average, the usual maximum draft of 39.5 feet for a ship passing through the Canal has been cut to 36 feet May 8. After some promising rain this month, administrators are more optimistic, but restrictions are expected to last at least until September.

Another impact port operators are seeing: Shippers are leaving behind heavy empty containers on port lots, rather than having them place costly weight on returning ships.

On the Canal's Atlantic side, the 1,000-container-a-day Manzanillo International Terminal is looking into expanding its acreage just to accommodate thousands of containers that aren't making the usual turnaround trip home. "With these restrictions, it's just not cost effective to use your weight to carry back empties to the Far East," says MIT port director John Bressi.

To save water, the canal - which uses a whopping 2 billion gallons of water a day in its lock system - is implementing a variety of measures to cut consumption. Smaller ships are being squeezed into locks with bigger ships when possible. Water that would normally be flushed directly out of the locks to the sea after one use is being "recycled" to an adjacent lock to get two bangs for one load of water.