Market Overview

Significant Earthquake Strikes Near Panama Canal

Significant Earthquake Strikes Near Panama Canal

The ground shook for a little while in Central America overnight as a 6.2-magnitude earthquake struck near the border of Costa Rica and Panama, about 28 miles west of the city of San José de David, Panama. People reported feeling the tremor in Panama City, some 300 miles away. There have been no known deaths, injuries or areas of significant damage as of early this afternoon (June 26).

SONAR Critical Events: Earthquake in Central America on June 26, 2019.

Northern and western Panama are sparsely populated, for the most part, and frequently hit by earthquakes. Last month, a 6.1-magnitude quake with an epicenter also near San José de David damaged some property and injured at least two people. In 2003, a 6.7-magnitude earthquake in the region damaged or destroyed hundreds of homes and killed two people. The most significant recent earthquake came in 1991, when a 7.4-magnitude tremor killed 23 people and injured 500 others as well as causing hundreds of deaths in neighboring Costa Rica.

This earthquake's epicenter was only 200 miles from the Panama Canal, a crucial gateway for east Asian goods heading to the East Coast of the U.S. There's always a chance that any aftershocks in the coming hours and days could do damage to the canal or its related infrastructure, delaying containerized cargo in the region.

One of the ports that could be impacted is Colon, located in Panama at the Caribbean entrance of the Panama Canal. The United Nations' Economic Commission for Latin America and the Caribbean (ECLAC) placed the Colon port complex at the top of 2018's list of the region's port activity, handling 4.32 million twenty-foot equivalent units (TEUs), 11 percent higher than 2017. Colon includes Manzanillo International Terminal (MIT), the largest transshipment port in Latin America and one of the most modern in the world. It also includes the Evergreen port (Colon Container Terminal) and Hutchison-Whampoa's port of Cristobal, all located in the same area, which represents a huge dock frontage. The administration of the three ports is independent and private.

The Pacific side of the Panama Canal is home to another of the busiest commercial ports in Central America. The Port of Balboa is in a perfect geographic location to serve as an important distribution center for goods destined for the Far East, North America, the Caribbean, Central America and the west coast of South America. Nearly 100 acres (40 hectares) at the port are dedicated to container storage, with five docks on site that are available for use by container ships.

SONAR ticker: WCI.SHALAX for 2014-2019.

Finally, there's Peurta Limon in Costa Rica. Several years ago, Limon and Moin joined to form a single infrastructure that made this new port one of the largest in Central America on the Caribbean coast, surpassing even Veracruz. Traffic of oil and its derivatives is the great strength of Limon-Moin, which is also a great exporting point for bananas in the region.

Last night's earthquake, which hit around 12:30 a.m. local time in Panama, was shallow. It originated just 16.2 miles underground (26.2 kilometers), according to the U.S. Geological Survey (USGS) report. The USGS considers an earthquake shallow if it is less than 43 miles deep. Shallow earthquakes usually do more damage than deeper ones, depending on their magnitudes and proximities to fault lines.

SONAR ticker: WCI.SAHNYC for 2015-2019.

Anyone waiting for ocean cargo from Asia should pay attention to possible reports of aftershocks or new tremors in the Panama Canal region. Shipping rates could theoretically skyrocket if the Panama Canal experienced any kind of significant disruption. FreightWaves Market Expert Henry Byers said this is what happened in early 2015 right before the resolution of port strikes in Los Angeles. The Drewry World Container Index from Shanghai to Los Angeles (WCI.SHALAX) showed a peak in 40-foot container rates in February as ships that had been sitting off the coast finally got unloaded. A lot of freight was re-routed to the East Coast, and the spread between the East Coast and West Coast rates (WCI.SAHNYC) at that time was the largest in history.

Image Sourced From Pixabay

Posted-In: central america Freight Freightwaves shippingNews General


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