Panama Canal may cut ship transits as El Nino drought deepens

Panama Canal Authority announced on Tuesday that it could further reduce the number of daily ship transits through the Panama Canal as the ongoing El Nino event drives reservoir levels to historic lows.

Water shortage forces tighter limits

The interoceanic waterway, which moves about five percent of global maritime trade, has already cut its daily slot allowance from 36 to 32 vessels for mid‑September. Each transit consumes roughly 200 million litres of fresh water, drawn from two reservoirs that rely on rainfall now scarce because of the climate pattern.

Why the bottleneck matters

The reduction comes as the canal has become a key alternative to the Strait of Hormuz, where Iran has blocked traffic in response to the conflict involving the United States and Israel. Energy shipments that once passed through the strait now rely more heavily on the canal, which handles around 40 percent of U.S. container traffic and a substantial share of trade between the east coast of the United States and China.

We do not rule out the possibility that in February or March we may have to lower the limit -- probably not to 24 slots per day, but it could be reduced to 29 or something similar,

Said Ilya Espino de Marotta, the first woman to lead the authority, indicating that further cuts are on the table if reservoir levels do not recover.

What lies ahead

In addition to slot reductions, the canal has already lowered the maximum draft from 15.2 metres to 14.6 metres, meaning ships must carry less cargo to clear the shallower water. Experts warn that sustained limits could increase shipping costs and extend delivery times, pressuring global supply chains already strained by geopolitical tensions.

Monitoring of the drought will continue, and the authority may announce additional adjustments in early 2027. For a broader view of how this El Nino event could affect other regions, see the climate‑crisis analysis of its impact on Europe.