What overarching effect does low water levels in the Panama Canal have on international trade?

Low water levels in the Panama Canal lead to increased shipping costs primarily due to the constraints placed on the movement of cargo ships. When water levels drop, the canal may need to limit the size or the number of vessels that can transit, which can result in fewer ships being able to pass through at any given time. Consequently, shipping companies may face delays, requiring them to divert to longer routes or wait longer for favorable conditions to transit the canal.

As shipping companies incur additional costs associated with longer travel times and potential penalties for delays, these expenses are typically passed on to consumers, thereby increasing the overall cost of goods. Furthermore, ships may also require additional fuel to travel alternate routes, exacerbating the issue of escalating shipping costs. Therefore, the overarching effect of low water levels in the Panama Canal is an increase in shipping costs, ultimately impacting international trade dynamics.