The Panama Canal has imposed unprecedented restrictions on transits, driven by water shortages linked to the El Niño phenomenon in 2023. The canal’s reservoir system is significantly impacted, causing ripple effects across global shipping operations.

Following Panama’s rainy season, Lake Gatun, the crucial reservoir supplying water for the canal’s locks and the nation’s primary source of potable water, is currently 6 feet below anticipated levels.

In response, the Port Authority has slashed daily operations by 33%, allowing only 24 containers to pass through the lock system.

This bottleneck is expected to worsen during the upcoming dry season.

Dr. Ricaurte Vásquez Morales, Panama Canal Authority administrator, acknowledged challenges affecting international trade, including increased interest rates impacting merchandise value and inventory carrying costs.