Panama Canal Paralyzed: How Drought Halted Global Shipping

It was supposed to be a regular busy week at the Panama Canal — a vital 80-kilometer maritime chokepoint handling about 5% of global trade. But in mid-2023, a historic drought driven by a shifting El Niño dropped Gatun Lake’s water levels so low that the locks could not operate normally. Panama’s authority imposed draft restrictions, slashed daily transits from 38 to 24, and opened paid auctions for priority slots, forcing shippers to cut cargo, wait in long queues, or reroute through longer passages like the Suez/”Swiss” Canal — adding roughly 14 extra days to voyages.

The episode explains how the canal’s dependence on freshwater reservoirs made it vulnerable to climate variability, the ripple effects on energy, automotive and retail supply chains, and the industry’s shift toward alternative routes, rail corridors, and water-conservation measures. It’s a stark reminder that century-old infrastructure can be disrupted by modern climate risks, and that diversification of trade routes is now essential.

 

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