Panama Canal to cut shipping as El Niño-driven drought lowers water levels

The Panama Canal will reduce the number of ships allowed to transit the waterway from next month as drought linked to the El Niño climate phenomenon lowers water levels in the lakes that supply the canal, the Panama Canal Authority said on August 21.

Thus, according to the authority the number of daily vessel transits will fall from 36 to 34 from September 3, and to 32 from September 15, Caliber.Az reports per foreign media.

Rainfall in the canal's watershed was 34% below its historical average between May and August, while the authority warned that El Niño could further reduce precipitation in the coming weeks.

The canal operator said that "lower than forecast rainfall in the canal's watershed" called for measures to bolster the "long-term sustainability" of the waterway.

The authority has already introduced water conservation measures, including lowering the maximum draft permitted for the largest vessels, limiting how deeply ships can sit in the water.

It said it did not rule out further restrictions on shipping depending on rainfall in the coming weeks.

The Panama Canal handles about 5% of global maritime trade and around 40% of US container traffic, making it a crucial route for international shipping.

The waterway faced similar restrictions in 2023, when low water levels in the lakes supplying the canal forced operators to cut the number of daily ship transits from 38 to 22.

The latest reduction is expected to increase waiting times for ships seeking to transit without an advance reservation. About nine in 10 vessels using the canal have reservations, while the remaining slots are auctioned.

Before the Iran war, the average winning bid in the auctions was $135,000. In April, however, one shipping company paid $4 million for a transit slot.

The United States, China, Japan, Chile and South Korea are among the canal's main users.

Water availability is particularly sensitive in Panama because the lakes that supply the canal also provide water for about half of the country's 4.2 million people.

El Niño occurs on average every two to seven years and can alter rainfall patterns around the world. This year's event is shaping up to be one of the strongest on record.

By Aghakazim Guliyev