Al Niño Effect: Panama Canal Ship Traffic Set to Decline, Impacting Global Trade

Panama City, August 21: The impact of severe weather is expected to affect maritime trade routes significantly. Due to a severe drought in Central America and the Al Niño effect, the Panama Canal, one of the world’s most crucial maritime trade routes, will see a reduction in ship traffic. The Panama Canal Authority announced on Thursday that, due to falling water levels, it will reduce the number of daily transit slots available in the canal starting in September.

According to the Autoridad del Canal de Panamá (ACP), the Panama Canal connects the Atlantic and Pacific Oceans and is vital for global maritime trade. The canal allows ships to avoid the long route around Cape Horn at the southern tip of South America, saving both time and fuel.

Beginning September 3, 2026, the number of daily transit slots for Neo-Panamax locks will be reduced to nine. Meanwhile, the Panamax locks will have 25 daily slots. Following this, on September 15, the daily slots for the Panamax locks will be further reduced to 23.

Additionally, the maximum allowable draft for larger vessels will also be decreased. Starting August 26, the maximum draft for the Neo-Panamax locks will be set at 48 feet (14.63 meters), and from September 3, it will be reduced to 47.5 feet (14.48 meters). This means that some larger cargo ships may need to lighten their cargo weight.

The movement of ships through the Panama Canal primarily depends on sufficient water levels in lakes and reservoirs. A drop in water levels due to drought poses a challenge for the operation of the canal’s lock system and the safe passage of large vessels.

This situation could also raise concerns for the global supply chain. With a limited number of ships, wait times may increase, putting pressure on freight costs. There are fears that the international supply of containers, energy, and other essential goods may be affected. Recently, there has also been a sharp increase in the cost of securing slots to transit the canal.

The Panama Canal Authority has stated that it is closely monitoring changing weather conditions and water availability. If the drought worsens, additional restrictions may be implemented.

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