The Panama Canal has announced new restrictions on the number of vessels allowed to transit daily due to low water levels, which are expected to decrease further because of the El Nino weather phenomenon. Starting this week, the daily limit will be reduced to 34 vessels, down from the previous maximum of 40, and will decrease to 32 vessels on September 15. The Panama Canal Authority (ACP) reported that rainfall in the canal area from May to August has been 34 percent below historical averages.
The canal is a crucial maritime route, handling approximately 5 percent of global maritime trade. In 2024, cargo valued at $270 billion passed through the canal, accounting for 40 percent of U.S. container traffic. This year, the canal's share of global sea trade has increased to 5 percent, with 70 percent of traffic linked to the U.S.
Panama Canal administrator Ricaurte Vasquez Morales noted that over 10,000 vessels transited the canal in the first nine months of the year, marking a 5.2 percent increase from the previous year. The total vessel tonnage also rose by 7.2 percent during the same period.
As oil exports through the Strait of Hormuz have decreased due to geopolitical tensions, countries are increasingly relying on North and South America for oil supplies, leading to heightened traffic through the Panama Canal. U.S. crude oil exports surged by 46 percent year-on-year to a record 61.6 million metric tonnes in the second quarter of 2026.
The increased demand for transit slots has led to a bidding war, with average auction prices for slots rising from $55,000 to three times that amount. A South Korean ship recently paid a record $5.3 million for passage.
Experts, including Niels Rasmussen from the Baltic and International Maritime Council (BIMCO), warn that these restrictions will increase shipping pressures, potentially leading some vessels to reroute around the Cape of Good Hope, resulting in longer and more expensive journeys. The impact on freight rates is expected to escalate over the next six to nine months, particularly affecting container cargo from Asia to the U.S. East Coast and LPG exports from the U.S. Gulf to Asia and Central and South America.