Panama Canal to Cut Ship Transits as Drought Bites
The Panama Canal will reduce the number of ships allowed to pass through, its operator said, after low rainfall driven by the returning El Niño weather pattern cut water levels in the lakes that feed the waterway. The canal is one of the world’s busiest trade arteries, carrying a large share of global container and commodity traffic. Fewer crossings mean longer queues and higher costs for shipping.
The canal is a rain-fed system, relying on freshwater lakes to lift ships between the oceans, which makes it acutely vulnerable to drought in a way most trade chokepoints are not. A previous El Niño squeeze forced deep cuts to traffic and sent shippers scrambling for costlier alternatives around South America or through a strained Suez. With the Gulf crisis already throttling Hormuz and Red Sea routes, another constrained artery tightens global supply chains further and feeds into the price of moved goods. The episode is also a marker of how a warming, more volatile climate now reaches directly into commerce. Watch how deep the cuts go and whether freight rates climb.