Shipping braces for impact as Panama Canal slashes capacity

After its driest October on record, the Panama Canal will severely restrict transit capacity to conserve water. Shipping will feel the effects in the months ahead, with different vessel types facing different fallout.

Panama Canal Authority (ACP) Administrator Richarte Vasquez outlined the current challenge during a press conference on Sept. 12: Each transit of the Panama Canal consumes a large amount of water, regardless of ship size. If it doesn’t rain enough, the canal must either limit transits or reduce ship draft (the allowable distance between the waterline and the hull bottom).

Around 70% of vessels using the Panama Canal require a draft of 44 feet, which is the current limit, down from 50 feet at the beginning this year. If the draft is lowered further, most ships won’t be able to transit with full loads.

“We will commit to 44 feet for the foreseeable future. If adjustments are required in order to maintain 44 feet, those adjustments will be on the number of transits per day,” Vazquez said six weeks ago.

Those adjustments are now required. The ACP had previously reduced daily transit reservation slots from 36 to 32. On Tuesday, it announced that reservation slots will be limited to 25 as of Friday, 24 starting Nov. 8 and 22 on Dec. 1. The number of reservation slots will fall to 20 on Jan. 1, 2024, then 18 starting Feb. 1.