The Panama Canal Authority will cap daily vessel transits starting in September, citing persistent rainfall deficits worsened by the strengthening El Nino climate pattern. Effective September 15, the number of daily transits will drop from 36 to 32, with an initial reduction phase beginning September 3.

This vital waterway, which links the Atlantic and Pacific Oceans and handles more than 3% of global maritime trade, relies on freshwater to operate its locks. Local precipitation has consistently fallen below normal levels, prompting the authority to impose earlier restrictions last month that required vessels to reduce cargo loads in response to declining water levels.

The canal experienced historic drought conditions during the 2023-2024 period, leading to the first significant cut in booking slots. While various water conservation measures have been implemented since then, the authority noted Thursday that insufficient rainfall necessitates further control actions.

This year's El Nino, which elevates sea surface temperatures in the Pacific, could trigger severe droughts and warmer winters, potentially ranking among the strongest occurrences on record. Mainstream climate scientists have labeled it a "super El Nino," projecting disruptive weather patterns across multiple continents.

Global logistics firms have already prepared for potential shipping disruptions along this 110-year-old waterway. In August, transit fees hit an all-time high, averaging approximately $1.1 million per vessel—more than 16 times the average cost during the same period last year. The fee surge followed the closure of the Strait of Hormuz in February, after the U.S. and Israel conducted airstrikes on Iran.

Starting September 3, the authority will reorganize daily transit slot auctions into four cargo categories to promote fairer allocation. Additionally, within the larger Neopanamax locks, priority will be given to vessels with the greatest cargo capacity. The authority strongly recommends that shipping users reserve transit slots well in advance.

This new allocation framework arrives as LNG carriers and grain commodity traders remain hesitant to return to the route following the 2023-2024 slot reductions. The authority stated it will promptly notify customers of any operational changes deemed necessary, adding that due to weather shifting faster than originally anticipated, it will make every reasonable effort to announce future adjustments as far in advance as possible.

Beyond its critical role in global trade, the waterway serves as a core revenue source for the Panamanian government, contributing nearly $3 billion to the national treasury in fiscal year 2025.