Panama is preparing to impose additional restrictions on vessel traffic through the Panama Canal, citing intensifying water shortages driven by a strengthening El Niño weather pattern. The warning was issued by Ilya Espino de Marotta, who assumed the role of Panama Canal Authority administrator on Monday, following the government’s declaration of a nationwide state of emergency over the climate phenomenon on August 26.
The vital maritime chokepoint, which facilitates approximately 5% of global sea trade, has already begun scaling back operations. The daily transit cap was lowered from 36 vessels last month to 34 starting September 4. A further reduction is scheduled for September 15, bringing the limit down to 32 ships per day.
Espino indicated that constraints could be tightened again if dry conditions persist. Speaking to Reuters, she noted that rainfall levels during the critical months of September, October, and November would determine whether slots are reduced further in early next year, potentially dropping to around 29 vessels in February or March.
Officials do not anticipate restrictions reaching the severity seen during the 2023-2024 drought, when daily crossings fell as low as 22. The canal relies heavily on freshwater from the artificial Gatun and Alajuela lakes to operate its locks. Each average transit consumes roughly 200 million liters of water, making the 80km route highly vulnerable to prolonged dry spells. Levels in both reservoirs have already declined with the onset of El Niño, which is projected to be the strongest on record in the four decades since tracking began.
In addition to reducing the number of transits, authorities have decreased the maximum permissible draft for ships from 15.2 meters to 14.6 meters. This limitation forces vessels to carry less cargo to navigate the shallower water levels safely.
The disruptions arrive at a delicate moment for global logistics. With shipping traffic through the Strait of Hormuz declining sharply amid regional conflict, reliance on the Panama Canal has intensified. Consequently, some carriers have paid over $1 million at auction to secure transit slots.
Looking toward a long-term solution, Panama is developing a new reservoir at Rio Indio. Designed to supply water for canal operations and serve more than half of the population for the next fifty years, the project is expected to take five to six years to complete. Espino stated that the infrastructure would ensure the canal no longer needs to reduce draft depths or limit transits in the future.
This highlights how climate change directly disrupts global trade. That new reservoir better be finished soon.
Shipping costs are skyrocketing. Paying a million for a slot is insane when the Strait of Hormuz is closed.