Panama Canal to further cut daily traffic as El Niño drought deepens
Worsening El Niño drought is forcing the Panama Canal to reduce daily vessel transits to an average of 29.5 from October, an 18% drop from August levels, threatening more delays and costs for global shipping.
The Panama Canal Authority is preparing another reduction in maritime traffic as drought conditions linked to the El Niño climate pattern continue to worsen. According to a draft plan submitted to Panama's parliament, an average of 29.5 vessels will be permitted to transit daily starting in October — an 18% decrease from the 36 daily transits allowed in August. Officials had already cut the daily limit from 36 to 32 in September because of the drought.
The canal handles roughly 5% of global maritime trade and about 40% of US container traffic, making it a preferred route for companies shipping goods between China, Asia and the United States, largely because it typically cuts costs and transit times.
The situation has been complicated further by the US and Israeli war against Iran, which has disrupted shipping through the Strait of Hormuz and added logistical costs for companies also relying on the Panama route. In August, with wait times reaching 10 days — the longest since May — one container ship reportedly paid around $4m to skip the queue through a daily auction system that lets shipowners bid for priority slots, with prices climbing during periods of high demand.
Further restrictions are possible, as El Niño is expected to peak later this year and is forecast to be the strongest in four decades. The 82km canal, which links the Caribbean Sea and the Pacific Ocean, depends on freshwater flowing into Lake Gatun to operate its lock system; rainfall in the watershed fell short of forecasts in September.
When lake levels become unsafe for the largest vessels, the Panama Canal Authority imposes restrictions to protect safety and conserve water. In 2023, similarly low water levels forced a cut in daily transits from 38 to 22, creating a bottleneck of ships and pushing companies to seek alternative shipping routes.
El Niño has hit Central America and northern South America especially hard, with nine countries recording their hottest June-to-August period on record this year. Globally, 52 countries across every continent broke seasonal temperature records over the same period, according to an analysis of data from the Copernicus climate programme.
