A global bottleneck under climate pressure
The Panama Canal, responsible for connecting the Atlantic and Pacific oceans, continues to suffer from operational restrictions due to a historic drought. In August 2025, the Canal Authority announced that draft limitations and the reduced number of daily reservations would remain in force, generating significant impacts on trade flows.
Context and causes
The Isthmus of Panama region has been experiencing much lower than average rainfall since 2023. Experts point out that the El Niño phenomenon, combined with long-term climate change, has drastically reduced the capacity of the artificial lakes that supply the canal. As a result, the minimum depth allowed for vessels has been reduced, limiting the amount of cargo transported.
This situation is not unprecedented, but the duration and intensity of the current drought surpasses previous events. Shipowners report that some ships have been forced to reduce cargo by up to 20% to meet the restrictions, which makes operations more expensive and reduces logistical efficiency.
Impacts on global trade
Around 5% of the world's maritime trade passes through the Panama Canal, including critical routes between Asia and the east coast of the United States. The restrictions have increased ship queues and redirections via alternative routes, such as Cape Horn or the Suez Canal. In both cases, transit times can increase from 7 to 12 days, increasing bunker costs and reducing the reliability of deadlines.
Exporters of agricultural products from South America were also affected, as they use the channel to access Asian markets. In the energy sector, shipments of liquefied natural gas (LNG) suffered delays and higher freight rates, hurting importing countries.
Expert opinion
Infrastructure consultants warn that the water crisis in Panama could become recurrent. “The lack of investment in additional storage systems and water management policies makes the canal vulnerable to extreme weather cycles,” said an engineer specializing in hydraulic works. Another analyst pointed out that “global operators need to prepare for a scenario in which Panama no longer guarantees the same historical reliability”.
Recommendations for companies
Logistics companies and shippers are reviewing their strategies. Some recommendations include:
- Expand safety stocks in critical regions;
- Diversify transportation routes, even if they are temporarily more expensive;
- Invest in end-to-end digital visibility;
- Negotiate contractual clauses that provide for contingencies for delays.
Source: More Than Shipping