The Panama Canal will limit daily traffic to 34 vessels from Thursday, down from its traditional capacity of up to 40, before reducing the cap to 32 vessels on September 15. The Panama Canal Authority says the measures are needed because of low water levels linked to the El Niño weather phenomenon.
Why water levels are driving the restrictions
Rainfall in the canal area from May to August was 34 percent below its historical average, according to the Panama Canal Authority, which said El Niño could reduce it further. The authority has also lowered the maximum draft for the largest ships, limiting how deeply vessels can sit in the water.
A busier route at a sensitive time
The canal authority says the waterway handles about 5 percent of global maritime trade. Some 70 percent of that trade is destined for or originates in the United States. More than 10,000 vessels transited the canal in the nine months ending in June, up 5.2 percent from a year earlier, while total vessel tonnage rose 7.2 percent.
The increase comes as disruption in the Strait of Hormuz has pushed countries toward supplies from North and South America. United States crude oil exports rose 46 percent year on year to a record 61.6 million metric tonnes in the second quarter of 2026, while Brazil, Argentina and Guyana also recorded record oil shipments during 2026, according to the cited trade data.
What shippers may face
Demand for canal transit slots has already driven up auction prices. Average prices were $55,000 between October and February, but the canal authority says recent prices have tripled. One South Korean ship paid a record $5.3m to transit on September 1, according to Bloomberg News.
Niels Rasmussen, chief shipping analyst at the Baltic and International Maritime Council, said reduced cargo capacity and higher slot prices are likely to push freight rates higher. Ships may instead take longer routes around the Cape of Good Hope in South Africa. Asia-to-US East Coast container cargo, US Gulf LPG exports to Asia, and LPG shipments to the western coasts of Central and South America could be especially affected.
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