The Panama Canal faces potential reductions in daily ship transits due to declining water levels, posing further challenges to global trade already affected by conflict in the Middle East, according to the waterway’s new administrator. Ilya Espino de Marotta, who was officially appointed on Monday, warned that transit numbers could drop to as few as 27 vessels per day under a severe drought scenario, down from the current temporarily reduced limit of 32.
The Panama Canal Authority based its projections on rainfall data resembling that of 1997—the driest year in the canal’s history. Espino de Marotta said climate change is significantly increasing the frequency of dry years, occurring roughly every three years, complicating water management for the canal’s operations. The freshwater reservoirs that supply the locks are essential for moving ships across the 50-mile channel connecting the Atlantic and Pacific Oceans, through which more than 3% of global trade passes.
On average, about 36 ships traverse the canal daily, although this year numbers have occasionally reached 40. However, ongoing water shortages have forced a reduction to 32 daily transits since mid-September to avoid more severe restrictions during the dry season, which runs from December to April. The administrator noted that the “worst-case” scenario transit estimate of 27 remains closer to recent lows—22 transits per day recorded in 2023.
The canal’s water challenges come amid heightened disruptions in global shipping routes, including Houthi attacks on the Suez Canal three years ago and current restrictions on traffic through the Strait of Hormuz amid ongoing tensions between the United States and Iran.
To address the water scarcity issue, the Panama Canal Authority is pressing ahead with plans to build a $1.6 billion reservoir on the Rio Indio. Scheduled for completion by 2032, the reservoir aims to capture rainfall from May to December, providing additional water storage estimated to support 10 to 15 daily transits. However, its primary function will be to supply drinking water for local communities, meaning it will enhance the canal’s resilience but not significantly expand its operational capacity.
Espino de Marotta emphasized the urgency of completing the reservoir project on time, citing increased risks of operational impacts if dry years become more frequent. "The longer we take to finish the project, the more impact we’ll have on the industry," she said, highlighting climate change as the central factor driving evolving challenges for the vital waterway.