Panama Canal Imposes Traffic Restrictions Due to Low Water Levels Amid Global Shipping Pressures

While shipping remains severely disrupted in the Strait of Hormuz, shippers are facing new constraints at another strategic maritime chokepoint on the other side of the world: the Panama Canal. From this week, the number of vessels permitted to pass through the canal per day will begin to fall because of low water levels, canal authorities say.

The Panama Canal Authority states that from Thursday, only 34 vessels will be permitted to sail daily through the canal, down from the traditional capacity of up to 40 per day. On September 15, the cap will drop further to 32. These new limits are necessary as the country braces for lower water levels due to the El Nino weather phenomenon, with rainfall from May to August down by 34 percent from its historical average in the canal area.

According to research by Al Jazeera, some $270bn of cargo passed through the canal in 2024, accounting for 40 percent of all US container traffic and 2.5 percent of all global sea trade. This year, that figure has risen to 5 percent of all global sea trade, with 70 percent destined for or originating in the US.

Traffic has increased significantly this year. At the end of June, Panama Canal administrator Ricaurte Vasquez Morales reported that more than 10,000 vessels had transited the canal over the previous nine months, up 5.2 percent from the same period a year earlier. Furthermore, the Hormuz crisis has contributed to this surge, as Gulf producers are unable to export as much oil through the Strait of Hormuz, leading countries to increasingly turn to North and South America for supplies.

Crude oil exports from the United States leapt by 46 percent year-on-year to a record 61.6 million metric tonnes in the second quarter of 2026, according to global trade intelligence firm Kpler. Brazil, Argentina and Guyana have also posted record shipments of oil so far in 2026.

The rise in cargoes needing to be shipped through the canal is creating a bidding war for transit slots. Average auction prices have jumped three-fold, and one South Korean ship paid a record $5.3m to pass through the canal on September 1, according to Bloomberg News. Niels Rasmussen, chief shipping analyst at the Baltic and International Maritime Council (BIMCO), noted that the restrictions will put more pressure on shipping, potentially pushing some vessels to reroute around the Cape of Good Hope in South Africa.