Panama Canal Cuts Draft Limit as Water Concerns Return

The Panama Canal Authority (ACP) has announced a lower maximum authorized draft for vessels passing through its neopanamax locks, a decision that could renew concerns in global shipping over the risk of disruption similar to the canal’s previous drought crisis.

From July 3, ships transiting the neopanamax locks will be restricted to a maximum draft of 49.5 ft (15.09 m). The ACP said the decision is based on present and forecast water levels in Gatun Lake, as well as the possible emergence of an El Niño weather pattern later this year.

The change is part of the canal’s wider water management approach and represents the first return of draft restrictions in around two years. Canal officials emphasized that the measure is precautionary and will not reduce the number of daily vessel transits. However, the announcement recalls the severe 2023-24 drought, when water shortages led to transit limits and draft restrictions that reduced canal throughput by up to 40% below normal levels at the peak of the disruption.

During a recent industry briefing, canal representatives sought to reassure customers, saying unusually strong rainfall during the latest dry season had filled both Gatun and Alhajuela lakes to maximum capacity. The ACP said current water reserves offer a strong buffer if El Niño develops in the second half of the year, adding that it does not expect major disruption before December. Weather conditions and hydrological forecasts are being reviewed weekly.

Clarksons Research analysts said the Panama Canal is already facing growing pressure from record U.S. energy exports. Product tanker transits reached all-time highs in April and May, while rising liquefied petroleum gas and ethane exports have increased competition for transit slots. As a result, any future limits could have a greater effect than in earlier periods.

As trade flows are reshaped by the Middle East conflict, trends at Panama are again in close focus,” Clarksons said in its latest weekly report.

Early signs of congestion are already emerging. Clarksons estimates that waiting times for deepsea cargo vessels averaged 50 hours in April and May, compared with around 30 hours before the recent increase in traffic. The number of ships waiting to transit has also risen sharply.

Demand for priority passage is also intensifying. According to Clarksons, average auction prices for canal transit slots have tripled to about $400,000. Splash reported last month that some priority bookings had sold for as much as $4 million per vessel, exceeding prices seen during the previous drought emergency.