The Panama Canal could further reduce the number of vessels permitted to transit the crucial waterway as intensifying El Niño conditions worsen drought and water shortages, raising fresh concerns for global shipping, commodity flows and supply chains. The Panama Canal Authority’s new administrator, Ilya Espino de Marotta, has warned that daily transit slots could eventually fall to around 29 if rainfall fails to replenish the reservoirs that supply the canal’s lock system. The canal is currently moving towards a limit of 32 vessels a day, down from 36 previously. Authorities have indicated that further restrictions could be introduced in January, February or March depending on rainfall during the critical months ahead. The potential reduction comes as the Panama Canal is already facing heightened demand. The waterway has become particularly important for shipping lines seeking alternatives amid disruptions to traffic through the Strait of Hormuz. The canal handles around 5% of global maritime trade and provides a key shortcut between the Atlantic and Pacific oceans. The canal’s dependence on freshwater makes it especially vulnerable to prolonged dry conditions. Each vessel transit consumes approximately 200 million litres of water, which is used to operate the locks. Between April and August, Panama recorded a rainfall deficit of 35.8% against the historical average, with authorities reporting no immediate signs of recovery. Alongside transit restrictions, the maximum permitted vessel draft has already been reduced from 15.2 metres to 14.6 metres. A lower draft can restrict the amount of cargo vessels are able to carry, potentially affecting vessel economics and increasing pressure on freight rates. The situation recalls the severe 2023-24 drought, when daily Panama Canal crossings fell as low as 22. However, the canal authority does not currently expect restrictions to reach those levels. Any further reduction in Panama Canal capacity could increase waiting times, vessel operating costs and freight rates, while prompting carriers to consider longer alternative routes. Industry observers have already warned that the canal’s constraints could add to disruptions affecting global commodity and supply-chain movements. For a maritime industry already navigating geopolitical disruptions and shifting trade routes, the prospect of another capacity constraint highlights the growing influence of climate and water security on global logistics networks. Panama is pursuing a new reservoir project on the Rio Indio as a longer-term solution, although completion is expected to take several years. 𝐒𝐭𝐚𝐲 𝐓𝐮𝐧𝐞𝐝 𝐭𝐨 CARGOCONNECT 𝐟𝐨𝐫 𝐥𝐚𝐭𝐞𝐬𝐭 𝐮𝐩𝐝𝐚𝐭𝐞𝐬!