Panama Canal caps daily transits again as El Nino drought returns

The Panama Canal Authority’s Advisory A-29-2026 caps daily transits at 34 vessels for booking dates from 4 September, falling to 32 from 15 September^1,2. The canal has not ruled out further restrictions on ship transits in the months ahead, owing to a drought exacerbated by El Nino⁴.

The Caribbean Private Sector Organisation warned that the restrictions put up to US$10 billion of CARICOM imports at risk^1,3, and said the drought will spike costs and reduce imports through the canal into 2027². Forecasters describe Indonesia and the Panama Canal as currently experiencing severe droughts, with fewer ships passing through as a result⁸. El Nino reduces operations at the canal⁷.

Why it matters to investors

Transit rationing at Panama arrives while two other chokepoints are already disrupted, and the effects compound rather than offset. Hapag-Lloyd told customers that a combination of weather-related interruptions, regional congestion, equipment shortages and Panama Canal transit restrictions is reducing overall capacity⁵. That is a carrier describing a capacity problem, not a routing inconvenience.

The congestion picture supports it. More containership capacity is now caught up in port congestion than at the height of the covid-era supply chain disruption⁹. Capacity tied up waiting is capacity removed from the market, and it shows up in freight rates before it shows up in goods prices.

Panama is also running an auction. The canal’s new administrator inherits a drought and a bidding war for transit slots⁶, which means the cost of passage rises for shippers even where a slot is available. The step down from 34 to 32 daily transits tightens that auction further¹.

What to watch

The first thing to watch is whether the cap falls below 32. The authority has explicitly left further restrictions open⁴, and the Caribbean warning runs into 2027 rather than treating this as a seasonal episode².

The second is the weather itself. Forecasters are describing a super El Nino on the horizon⁸, and the Atlantic has not yet seen a single hurricane this season, which is attributed to the same pattern⁷. A drought that persists through the northern winter would keep the cap in place well past the current advisory.

The third is where the cost lands. Diesel topping six dollars a gallon in the United States sits in the same logistics news cycle as the canal restrictions⁶, and both feed the same freight-cost channel. Investors watching goods inflation should treat the canal cap as an input to it rather than a separate story^5,9.