Panama Canal trims daily transits as El Nino drought deepens

From 3 September the Panama Canal Authority will reduce the number of vessels that can transit the waterway each day from 36 to 34, and from 15 September the limit will fall further to 32. The cut follows a sharp drop in water levels in the two artificial lakes that feed the canal, a consequence of an intense El Nino‑driven drought across Central America.

Why the restriction matters

The canal moves about five percent of global maritime trade and handles roughly 40 percent of U.S. container traffic. Fewer slots mean longer queues for ships that have not secured a reservation, and higher auction prices for the limited slots that are sold to the highest bidder.

Rainfall in the canal’s watershed has fallen 34 percent below the May‑August average, and forecasts suggest the shortfall could worsen. The authority has already lowered the maximum draft for the largest vessels to conserve water.

"Lower than forecast rainfall in the canal's watershed" has forced us to take steps to protect the "long‑term sustainability" of the waterway, said the authority.

What comes next

Operators warn that further cuts are possible if rain does not return soon. About nine in ten ships already book a slot in advance; the remaining slots are auctioned, with recent winning bids soaring to $4 million, far above the pre‑conflict average of $135,000.

The drought also threatens the lakes that supply drinking water to half of Panama’s 4.2 million residents. As the El Nino pattern, which peaks every two to seven years, intensifies, neighbouring Honduras has placed 80 percent of its territory on drought alert.

Stakeholders from the United States, China, Japan, Chile and South Korea will be watching closely, as any prolonged reduction in canal capacity could reshape shipping routes and freight costs for years to come.