Panama decided in August to reduce ship traffic in the Panama Canal, and it could reduce it even further in the coming months, the canal’s new administrator said on 8 September. The possible restrictions come as a strengthening El Niño weather pattern threatens the freshwater supply the canal relies on to raise and lower ships through its locks. The canal handles an estimated 3-5% of global maritime trade, meaning a prolonged slowdown could affect shipping costs and delivery times worldwide.

The Panama Canal Authority, the government body that manages the waterway, had already begun cutting daily ship transits from 36 to 34 on 4 September, with a further reduction to 32 ships due to take effect on 15 September.

The restrictions follow a nationwide state of emergency declared by Panama’s government on 26 August. The declaration came after El Niño, a recurring Pacific Ocean warming pattern that can disrupt rainfall across the tropics, contributed to drought and damaged harvests in the region. Panama’s Interior Minister, Dinoska Montalvo, said the declaration would allow authorities to prepare for conditions that could arise as El Niño strengthens.

Administrator Ilya Espino de Marotta, who took over the Panama Canal Authority on 7 September, said further cuts to ship transits could follow if the drought persists, with daily transits potentially falling to around 29 by February or March of 2027.

The canal has lowered the maximum permitted ship draft from 15.2 meters to 14.6 meters, meaning some vessels will have to carry less cargo to pass through the waterway. The canal is also facing increased demand as countries turn to oil supplies from North and South America after shipping through the Strait of Hormuz fell sharply during the US-Israel war on Iran.

Canal authorities have to restrict ship traffic when reservoir levels fall too low to conserve water for drinking supplies and hydroelectric power used by nearby communities. During a more severe drought in 2023-24, daily transits fell as low as 22. Espino said the canal is not expected to face restrictions on that scale.

A study published in the journal Science found that El Niño events are now 36 percent stronger than they were before the industrial era, linking the increase to human-caused climate change. The study also found that El Niño intensity has increased by 16 percent over the past 40 years.

To improve the canal’s long-term water supply, Panama is developing a new reservoir on the Río Indio to provide a more reliable supply of freshwater for the canal and more than half the country’s population for the next 50 years. The project is expected to take approximately six years to complete, meaning the canal will have to manage its existing water supplies and adjust ship traffic if drought conditions persist.

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A cargo ship passing through the Panama Canal (Photo: Roger W / Flickr [CC BY-SA 2.0])