Panama Canal to cut daily ship transits due to El Niño drought

The Panama Canal Authority (ACP) will reduce daily ship transits starting in September due to low rainfall and an intensifying El Niño, which is expected to be one of the strongest on record. The canal, which handles about 5% of global maritime trade, will cut daily crossings from 36 to 34 on September 3, and further to 32 on September 15 Source: DW News. This marks a reversal from May, when officials said no restrictions were planned Source: Al Jazeera.

Impact on shipping

The restrictions are expected to increase waiting times for ships without reservations, potentially raising costs for consumers. In August, a container ship paid $4 million to fast-track its transit, highlighting the backlog Source: CNN. The canal also plans to lower the maximum draft for vessels, forcing ships to carry less cargo Source: CNN. The United States is the canal's biggest user, with about 70% of goods passing through it Source: CNN.

Water scarcity

Rainfall in the canal watershed from May to August was 34% below the historical average, and inflows were 44% below normal Source: CNA. The lakes feeding the canal also supply drinking water to half of Panama's population, adding strain Source: The Guardian. The ACP has implemented water conservation measures but says further action is needed for long-term sustainability Source: BBC.

Historical context

During the 2023 El Niño, the canal cut daily transits from 38 to 22, causing supply chain disruptions Source: DW News. The current El Niño is expected to peak between October and December Source: CNN. The ACP does not rule out further restrictions depending on rainfall Source: Euronews.