The Panama Canal faces the prospect of further reductions in daily ship transits due to drought conditions linked to the ongoing El Niño weather phenomenon, according to the newly appointed administrator of the waterway. Ilya Espino de Marotta, who assumed leadership of the Panama Canal Authority on Monday, indicated that the canal’s operational capacity could be limited in the coming months if reservoir water levels do not improve.

Panama has declared a nationwide emergency over this year’s El Niño, which experts expect to be the strongest in more than four decades. The weather pattern has caused significant declines in rainfall, impacting the two major reservoirs that supply fresh water to the canal. Water from these reservoirs is essential for operating the locks that raise and lower ships during their transit across the 50-mile route connecting the Atlantic and Pacific Oceans.

Currently, daily transits have already been reduced from an average of 36 vessels last month to 32 as of mid-September. In a “worst-case scenario,” Espino de Marotta noted that daily transits could potentially fall further, possibly to around 27 or even lower by early next year. However, she expressed hope that reductions would not reach the low of 22 transits recorded in 2023, during another severe drought exacerbated by El Niño.

In addition to limiting the number of ships, canal authorities have lowered the allowable maximum draft—the vertical distance between the waterline and the ship's hull bottom—from 15.2 meters to 14.6 meters. This restriction means vessels must carry less cargo to reduce their draft, helping to conserve water but potentially affecting shipping efficiency.

The Panama Canal plays a critical role in global trade, handling approximately 3 to 5 percent of worldwide maritime commerce and facilitating the fastest sea route between the east coast of the United States and Asia, notably China. It also accounts for roughly 40 percent of U.S. container traffic. Usage of the canal has increased recently as shippers seek alternatives to the Strait of Hormuz, a strategic chokepoint currently impacted by geopolitical tensions following the war involving the United States, Israel, and Iran. Iran's restrictions on the Strait of Hormuz have disrupted the flow of energy shipments, further elevating the canal’s strategic importance.

Each ship passing through the canal requires about 200 million liters of fresh water, which is released into the ocean after use, heightening the demand on the water supply during drought periods. The canal has implemented water-saving initiatives over the past decade but remains vulnerable to fluctuating weather patterns intensified by climate change. Espino de Marotta emphasized the importance of ongoing infrastructure projects, including a $1.6 billion reservoir on the Rio Indio, scheduled for completion by 2032, which aims to improve water capture and provide greater resilience, although much of the reservoir's capacity will be allocated for drinking water rather than canal operations.

Experts warn that sustained or repeated transit restrictions could lead to increased shipping costs and delays, with wide-reaching effects on global supply chains. The canal’s future capacity and operational stability thus remain closely tied to climate variability and the evolving geopolitical landscape.