Panama Canal cuts crossings again as El Niño drains Gatun Lake

Panama's canal authority is bracing for another cut to daily ship crossings in October. The third this year. Drought tied to El Niño keeps draining the freshwater reserves that keep the locks running.

Daily vessel transits already dropped from 36 to 32 in September. A draft plan under review would push that number down again, to an average of 29.5 vessels a day, the Panama Canal Authority said.

Lake Gatun feeds every lock transit with fresh water. El Niño has cut rainfall so sharply this year that the lake now sits below the level the canal needs for full capacity.

The stakes go far beyond Panama. By the authority's own count, the canal carries about 5% of global maritime commerce and roughly 40% of all container traffic headed to the United States.

Bottlenecks have already turned costly. In August, one container vessel paid four million dollars at auction just to skip the queue and cross without delay. Ships that refused to pay waited as long as ten days for their turn, according to canal reports. Four million dollars bought immediate passage. Ten days bought nothing but a spot in line.

This is not the first squeeze. In 2023, a more severe shortage forced cuts to as few as 22 ships a day, well below the average of about 36 that once passed through.

The current drought fits a wider pattern. A global meteorological analysis recorded historic high seasonal temperatures across 52 countries between June and August, the same stretch when El Niño began emptying Gatun Lake.

For shipping lines and freight buyers on Mediterranean and Gulf routes, a slower and costlier canal adds real pressure to global freight costs. Vessel operators have few alternative corridors of comparable capacity. Every cut to daily transits pushes through charter rates and delivery schedules long before it shows up on a bill of lading.