The Panama Canal plans to reduce maritime traffic to an average of 29.5 vessels a day from October, according to a draft plan submitted to Panama’s parliament. The proposed cut would be 18% below the 36 daily transits allowed in August and follows a September reduction to 32 because of worsening drought linked to El Niño.
The 82km canal connects the Caribbean Sea with the Pacific Ocean and handles about 5% of global maritime trade, including roughly 40% of US container traffic. Its restrictions can increase waiting times and shipping costs because the route usually saves companies time and money.
Why the canal is restricting ships
The canal’s locks fill with water to lift ships 26 metres (85 feet) from sea level to Lake Gatun, then lower them on the other side. The system depends on rivers feeding the lake, and officials said in September that the watershed had received less rainfall than forecast. Related coverage: Panama Canal sets new shipping limits as El Niño threatens water levels.
The proposed restrictions could worsen if El Niño reaches its expected peak later this year. The weather pattern changes winds, air pressure and rainfall worldwide, and the current event is forecast to be the strongest in four decades.
Key points
- The canal relies on fresh water flowing into Lake Gatun to operate its locks.
- Officials impose restrictions when lake levels are unsafe for the largest ships or when water must be preserved.
- In August, vessels waited as long as 10 days to enter the canal, the longest wait since May.
- A container ship reportedly paid about $4m (£3m) in an auction to skip the queue.
Higher costs and wider disruption
Shipping companies usually pay a flat fee to reserve a transit slot. A daily auction also allows shipowners to bid to move ahead of the queue, with prices generally rising when demand is high.
The canal’s role in trade means disruption can affect companies moving goods between China, other parts of Asia and the United States. Logistics have also become more complicated and costly because the US and Israel’s war on Iran has disrupted the Strait of Hormuz.
The scale of a possible bottleneck was illustrated in 2023, when low lake levels led authorities to cut daily transits from 38 to 22. Ships queued up and companies sought alternative routes.
The climate pressure behind the cuts
El Niño has severely affected Central America and northern South America. Nine countries recorded their hottest June-August period this year, while 52 countries across all continents broke seasonal temperature records for the same period, according to an Agence France-Presse analysis of European Copernicus meteorological data.
The heat has included European heatwaves, drought in Sudan and toxic smoke in Indonesia. Eighteen African countries, from Mauritania and Sierra Leone to Eritrea and Ethiopia, also broke seasonal records for June-August.
What happens next
The draft plan submitted to Panama’s parliament would take effect from October if implemented; further restrictions remain possible as El Niño is expected to peak later this year. Read the context: Drought threat puts further Panama Canal ship cuts in play.
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