Key facts
- The Panama Canal will again cut maritime traffic due to worsening drought caused by El Niño.
- Starting in October, an average of 29.5 vessels will transit the canal daily, down 18% from 36 in August.
- The canal handles 5% of global maritime trade and about 40% of US container traffic.
- In September, daily transits were cut from 36 to 32 vessels.
- A container ship reportedly paid about $4 million to jump the queue in August.
- El Niño is forecast to be the strongest in four decades.
The Panama Canal Authority is set to further reduce maritime traffic due to a severe drought exacerbated by the El Niño climate phenomenon, impacting one of the world's critical shipping routes. Starting in October, the canal will allow an average of 29.5 vessels to transit daily, an 18% reduction from the 36 vessels permitted in August. This follows an earlier cut in September, when transits were reduced from 36 to 32 vessels. The canal, which connects the Caribbean Sea to the Pacific Ocean, is vital for global trade, handling approximately 5% of worldwide maritime traffic and about 40% of US container shipments. Shippers favor it for its cost and time efficiencies, particularly for trade between Asia and the US. The ongoing drought has led to significantly low water levels in Lake Gatun, the canal's primary water source, affecting its lock system. Shipping companies are already facing increased costs and delays, compounded by disruptions to the Strait of Hormuz due to the conflict in the Middle East. In August, some container ships reportedly paid as much as $4 million to bypass the usual waiting times. El Niño, a weather pattern known for causing global climate shifts, is predicted to peak later this year and is expected to be one of the strongest in four decades, potentially leading to further restrictions. Record-breaking heat and drought have affected numerous countries globally, with Central America and northern South America experiencing some of the most severe impacts. Nine countries in this region recorded their hottest June-August period on record, according to an analysis of data from the European Copernicus programme.