SHIPPING group Hapag-Lloyd has warned that using smaller ships on the Panama Canal could make the group "no longer competitive" as severe droughts continue to disrupt the world's largest trading route.

One of the driest years ever recorded has led the government to impose extended restrictions on shipping companies using the route, with water levels dropping to the lowest levels in years.

The canal has capped the daily number of ships that can pass through and added a depth limit for larger ships.

A spokesperson for Hapag-Lloyd told City A.M. the firm has had to "restrict intake" of cargo by "about 10 per cent".

It added that even if the rains were to "start soon, it will take a long time before the ships can operate at full capacity again. We don't expect it before [the end of] August."

Approximately 13,000-14,000 ships and about six per cent of global trade pass through the channel each year.

(c) 2023 City A.M., source Newspaper