Reports of lengthy shipping delays for vessels traveling through the Panama Canal this year have highlighted the critical but often overlooked role that fresh water plays across global supply chains.
Drier-than-normal conditions in Panama, brought on by El Niño, have left the region drought-stricken and water levels in the locks that feed the canal lower than normal. This has led to fewer ships being able to pass through the canal each day: only 31 ships currently, compared with 36 to 38 under normal conditions. This means longer waits to move products through the canal.
The slowdown at the Panama Canal shows how access to fresh water is key to the way goods are made and shipped, affecting everything from the price of groceries to retail forecasts for the upcoming holiday shopping season. I think businesses would be wise to pay closer attention to this issue.
But what does fresh water have to do with ocean freight? Plenty, it turns out.
The Panama Canal is a freshwater connection between two oceans. A series of locks on each side of the canal raise cargo freighters nearly 100 feet to human-made lakes that extend across Panama’s isthmus and lower them down to sea level on the other side.
Each crossing by a ship requires 52 million gallons of fresh water from lakes, rivers and streams across this small country. This creates a trade-off between preserving water and using it to allow ships to traverse the canal. Less water allocated to the canal means fewer ships can pass through.
This isn’t an isolated phenomenon. Periodic low water levels in the Mississippi River and the Rhine River in Germany have impeded barge traffic for years, disrupting supply chains while stoking debate about how to divide limited amounts of fresh water.
Water management is complicated by the fact that businesses and communities sometimes find themselves in conflict. Businesses want to use water for their operations, while communities want to preserve water supplies for residents.
Balancing these seemingly contrary needs calls for a deeper look into how much water is used in the making of products people buy and use every day.
Water is an important component of almost everything people buy. For example, roughly 2,600 gallons of water goes into making the fabric for a single pair of jeans. From growing cotton for the fibers needed to manufacturing the denim and getting those jeans onto store shelves, more water is embedded into each pair as it moves through the supply chain.
This is why businesses have more than purely altruistic reasons to address water-related problems. A lack of water can hamper production and disrupt the supply chains.
There are several ways in which businesses can improve their water management.
First, companies should realize that not everything requires clean water. Wastewater from one process can be used for another that doesn’t require clean water. Similarly, not every process pollutes water, so reuse is easy for wastewater from those processes.
Second, firms can share wastewater between facilities for reuse, a concept called industrial ecology. For example, nutrient-rich water from food production can be used for farm irrigation.
And third, since water is an excellent medium for heat transfer, rather than trying to cool one area and heat another, companies can connect the systems.
Opportunities abound for improving the management of fresh water. While stronger government regulations and expanded reporting requirements will help, decisions by businesses themselves can move the needle. For those who do, their standing in the communities in which they operate will surely benefit – as will their bottom lines.
Dustin Cole is an assistant professor of supply chain management at Auburn University. Distributed by The Associated Press.
