Global shipping faces a fresh chokepoint challenge as the Panama Canal Authority moves to restrict vessel booking slots amid worsening water supply conditions, compounding disruptions already gripping the Middle East and Red Sea trade routes.
According to shipping agent Norton Lilly, daily auctions for period three Panamax-class lock slots will be suspended from July 25 until further notice, cutting daily booking capacity from 36 to 34 vessels. The move is driven by current hydrological conditions at Gatun Lake and the potential onset of a severe El Niño weather pattern, which could sharply reduce freshwater flows critical to canal operations.
The restriction adds pressure on periods one and two bookings, with Norton Lilly warning of tighter competition for slots and greater risk for vessels without confirmed reservations. Gatun Lake currently stands at 84.6 feet, just below the five year July average, and is projected to fall further to 83.8 feet by late September.
The disruption comes as Middle East shipping remains severely affected, with the Iran-US conflict nearly halting Strait of Hormuz transits and Houthi threats continuing to pressure Red Sea routes via the Bab el-Mandeb Strait.
Forecasters, including the US Climate Prediction Center, say this year’s El Niño could be among the strongest in 75 years, with European weather models indicating a 70 percent chance of below-normal rainfall around the canal from August through November. During the 2023-2024 El Niño, monthly Panama Canal traffic fell from 1,523 vessels to just 1,054.
The Panama Canal Authority said in June it was preparing contingency measures to avoid repeating the severe transit restrictions imposed during the last major drought.
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