A New Chokepoint Under Pressure
The tighter access to Panama arrives as other major shipping routes struggle with their own bottlenecks, slowing global flows and driving up costs.
- Strait of Hormuz: The Iran-US war has brought traffic to a near standstill following attacks on vessels.
- Bab el-Mandeb Strait: In the Red Sea, Yemen's Iran-backed Houthi militant group has threatened shipping through this critical passage.
Together, these disruptions leave the industry with fewer reliable options at a time when demand for smooth transit remains high.
The Panama Canal Authority did not immediately respond to calls and emails seeking comment outside working hours.
What's Changing at the Canal
Starting July 25 and continuing until further notice, daily auctions in so-called period three for the canal's Panamax-class locks will be halted, Norton Lilly said in a notice on its website. The decision reflects present and projected water levels at Gatun Lake.
The immediate result is a reduction in daily booking capacity:
- Before: 36 vessels per day
- After: 34 vessels per day
Citing the authority, Norton Lilly said the suspension responds to current hydrological conditions and the potential development of an El Niño pattern. Past El Niños have dried up the freshwater lakes that supply the canal, forcing the authority to impose daily transit restrictions.
For carriers, the practical effects are clear. The suspension means fewer chances to secure slots, heightened competition for openings in periods one and two, and potentially "greater challenges" for ships without confirmed bookings, according to Norton Lilly.
Watching the Water at Gatun Lake
Gatun Lake sits above the waterway and feeds the locks below. Right now, its depth stands at 84.6 feet (25.8 meters), just under the five-year July average of 84.7 feet, per the Panama Canal Authority.
The outlook points lower. Water levels are projected to keep falling in the coming months, reaching 83.8 feet by late September—1.4 feet below the five-year average.
Lessons From the Last El Niño
History shows how quickly conditions can deteriorate. During the 2023–2024 El Niño, monthly vessel traffic through the canal dropped sharply, according to data from Weathernews Inc.:
- December 2022 (pre-El Niño peak): 1,523 vessels
- February 2024 (low point): 1,054 vessels
This year's pattern could prove even more severe. Forecasters have warned in recent months that the coming El Niño may bring significant disruption. Earlier this month, the US Climate Prediction Center said the pattern had continued to build and would likely rank among the strongest in more than 75 years.
Rainfall Forecasts Signal Trouble
El Niños generally produce drier-than-normal conditions across Central America. Panama has already recorded significantly below-average rainfall over the past seven weeks, according to the US Climate Prediction Center.
The dryness looks set to continue. The latest seasonal outlooks from the European Centre for Medium-Range Weather Forecasts indicate at least a 70% chance that the region around the Panama Canal will see rainfall in the bottom third of historical norms from August through November.
The authority has been preparing. In June, the Panama Canal Authority said it was ramping up efforts to withstand El Niño-fueled extremes, drafting a plan designed to avoid the kind of vessel restrictions that hampered shipping three years ago
