El Niño set to be 'strongest in living memory', causing Panama Canal to cut ship numbers

The Panama Canal is implementing significant reductions in daily vessel transits starting next month due to critically low water levels in its feeding lakes. Beginning September 3, the number of ships allowed through the vital waterway will decrease from 36 to 34, with a further reduction to 32 daily transits taking effect on September 15. This measure is a direct response to a severe drought exacerbated by an intensifying El Niño weather pattern, which has led to a 34% drop in rainfall in the canal's watershed between May and August compared to historical averages.

Scientists are closely monitoring this El Niño event, with forecasts indicating a strong likelihood it could become one of the most intense on record, potentially continuing its impact into 2027. Similar, and at times more drastic, restrictions were imposed during the 2023-2024 El Niño, when daily transits were cut from 38 down to as low as 22. The Panama Canal Authority has also previously implemented other water conservation strategies, including lowering the maximum permissible draft for larger vessels.

These shipping curtailments are expected to cause increased waiting times for vessels without reservations and could lead to higher transit costs for companies. The Panama Canal is a crucial artery for global maritime trade, handling approximately 5% of worldwide shipping and about 40% of U.S. container traffic, highlighting the potential for widespread logistical disruptions. Beyond immediate operational challenges, the prolonged drought and the anticipated intensity of El Niño raise concerns about the long-term sustainability of the waterway and the freshwater supply for Panama's population.