As Panama Canal traffic plunges by a third, a Nicaraguan route is in play

Shipping companies are searching for alternate routes.

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Severe drought has forced authorities to cut ship crossings by more than a third in the Panama Canal.

(Michael Molinski is a senior economist at Trendline Economics. He’s worked for Fidelity, Charles Schwab and Wells Fargo, and previously as a foreign correspondent and editor for Bloomberg News and MarketWatch.) 

PANAMA CITY (Callaway Climate Insights) — Ship crossings at the Panama Canal have been cut by more than 35% and inflated the cost of using the channel as a result of the severe drought affecting the region, prompting shipping companies to search for alternative routes — including resurrecting the idea of building a canal across Nicaragua.

The drought has created a traffic jam of ships, and some shipping companies have forked out as much as $4 million in an auction to use the canal for a single crossing.