The Panama Canal Authority is temporarily suspending part of its booking system for ships transiting the waterway between the Pacific and Atlantic, citing present and projected water levels at Gatun Lake and the potential onset of a strong El Nino. Shipping agent Norton Lilly said daily auctions in period three for the canal's Panamax class locks will be halted from July 25 until further notice, cutting daily booking capacity from 36 vessels to 34.
Gatun Lake, the freshwater reservoir that feeds the locks, currently sits at 84.6 feet, just below the five year July average of 84.7 feet. The Panama Canal Authority projects the lake will fall to 83.8 feet by late September, 1.4 feet below the five year average, with rainfall in Central America already tracking well under normal over the past seven weeks.
The US Climate Prediction Center said this month that El Nino has continued to build and is likely to be one of the strongest in more than 75 years. The European Centre for Medium Range Weather Forecasts puts the odds of below normal rainfall around the canal at 70% or higher from August through November, pointing to a sustained dry stretch through the peak of the shipping year.
The last El Nino, in 2023 to 2024, hammered canal throughput: monthly transits fell from a peak of 1,523 in December 2022 to just 1,054 by February 2024, according to Weathernews Inc data. The authority said in June it was drafting a plan intended to avoid a repeat of the vessel restrictions that squeezed shipping three years ago.
For owners and charterers, the Panama tightening lands on top of active disruption at other global chokepoints. The Iran and US war has brought traffic through the Strait of Hormuz to a near halt after repeated tanker attacks, and Yemen's Houthi militants continue to threaten shipping through the Bab el-Mandeb. Fewer slot opportunities at Panama, more competition for the remaining periods, and greater exposure for ships arriving without confirmed bookings all point to firmer rates and longer routings on east west trades in the months ahead.