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What is happening in the Panama Canal..??

The Panama Canal is considered a marvel of engineering and a critical conduit for global shipping..

The Panama Canal is, however, currently grappling with a significant water shortage, and to fully appreciate and understand the gravity of this situation, we must delve into the canal’s history and its reliance on specific water management systems..

History of the Panama Canal

The original Panama Canal was built with a system of locks in which ships are raised from the sea to the human-made Gatun Lake (which is normally at about 85 feet above sea level) by a system of locks wherein, all the water utilized to lift the ship to Gatun level is dumped into the sea..

Gatun Lake is a freshwater lake that was created by damming up the Chagres River (its main feeder) when the waterway was originally built back in the early 1900s..

Understanding that the operation of the canal depended on the downpours of the rainy season, the Panama Canal Company decided to build in 1935 an additional water reservoir by constructing another dam higher up in the Chagres River..

That is how Madden, or Alajuela Lake, was created.. Whenever the Gatun Lake level was dropping below its optimal, especially during the dry season, water would be spilled from Alajuela Lake to keep shipping from being affected..

But as years went by and traffic through the Panama Canal increased there was an increase in the demand for fresh water used..

Furthermore, changes in the weather pattern and the appearance of El Niño phenomena drove the Panama Canal, in some instances, to face critical water shortage..

These situations were still manageable by restricting the then maximum allowable draft of 39’06” to 36′..

This restriction in draft affected mainly most bulk carriers and tankers, but very seldom containers or other types of vessels.. Other than that, the same number of ships (36 to 40) would keep flowing through the waterway..

This was the scenario before the canal was expanded – Manageable shortage of water and Minimum disruption of shipping..

What is happening now in the Panama Canal

In 2023, the Panama Canal authorities enforced a drastic reduction in the draft, causing a reduction of almost half of the daily amount of ships transiting the canal, long queues, ships rerouted, and shipping companies paying up to 4 times what their ships normally used to pay to cross.. Why is it so..??

Before we answer this question, we have to remember that in 2016, the Panama Canal was expanded.. Its channels were deepened and widened, and a new larger set of locks were built to allow bigger ships with deeper drafts..

The Neo Panamax locks were built to take advantage of the “economy of scale” and its constituent ever-increasing fleet of mega-ships that have been taking over the oceans..

The deepening and widening of the channels would not only allow Neo Panamax ships with deep draft to transit but also translates to an increase in the amount of water available in the Gatun Lake for canal operation..

Everything was working to perfection up until the year 2023 that is.. 

Weather Patterns and El Niño

Whether one believes in global warming or not, weather patterns keep changing..

There are two seasons in Panama, the dry and rainy seasons.. The former normally goes from December to April, and the latter from May to November..

Both seasons have been inconsistent for the last few decades, with dry seasons extending beyond the expected and rainy seasons with low downpours.. If we then add the El Niño phenomena then we have a good mixture for catastrophe..

The El Niño phenomenon causes severe droughts and the absence of rain.. Though it is cyclical, its duration varies..

If the Panamanian dry season coincides in time and duration with El Niño, then the consequences for the operation of the canal would be nearly unnoticeable.. But if El Niño occurs during the Panamanian rainy season, and then overlaps with the dry season, things get complicated..

And THIS is exactly what is happening right now..

We are currently witnessing an exacerbation of water scarcity, largely attributed to inconsistent weather patterns in Panama, marked by prolonged dry seasons and less intense rainy seasons..

This, coupled with the effects of El Niño, has resulted in Gatun Lake’s water level dropping over 2 meters below its optimal level, along with Alajuela Lake which was also affected..

How does restricting the number of ships transiting the canal per day help the situation..??

We need to understand that the freshwater of Gatun Lake is not exclusively used for the operation of the canal, it is actually one of the most important sources of water for the over 2 million inhabitants of Panama City..

This shortage has compelled the Panama Canal Authority to drastically reduce the number of ships passing through daily, leading to long queues and diverted routes, significantly impacting global shipping..

This dual role places the Panama Canal Authority in a delicate position of balancing commercial and social responsibilities..

Solutions to the water shortage in the Panama Canal

The Panama Canal Authority is proactively seeking solutions, including the construction of new reservoirs and river redirections, to address these challenges.. These efforts aim to ensure the canal’s operational sustainability while also safeguarding water resources for the local population..

As of now, the official website of the Panama Canal Authority provides real-time information on the canal’s water levels, offering valuable insights into the current situation and the Authority’s responsive measures..

This data underscores the critical need for innovative and sustainable water management strategies to preserve this century-old waterway’s functionality for future generations..

The water shortage at the Panama Canal, influenced by changing climate patterns and increased shipping demands, presents a complex challenge..

Balancing water management for canal operations and the needs of Panama City’s residents is critical..

As per the Panama Canal Authority, there is no silver bullet to this issue, and they are leveraging a multitude of action-oriented solutions including

  • Operational and water-saving strategies
  • Ensuring reliability in transit
  • Adjusting the maximum draft and daily transit capacity
  • Managing Water Shortage through cross-filling which involves reusing water from one lock chamber to another which saves the equivalent consumption of six daily transits
  • Tandem lockages, which involve two ships transiting at the same time and occupying one chamber whenever the size of the vessels permits
  • Optimizing the transit schedule to maximize water savings in each chamber to accommodate the highest number of vessels


As of this post, it is understood that the Alajuela Lake which is higher than Gatun has reached its optimal level for the season and some water is spilling into the Gatun Lake..

In line with the Panama Canal announcement that it will increase the number of daily transits to 24, starting in January 2024, it is also understood that the current daily capacity has already reached 24 transits daily which is a good sign for global trade..

The ongoing construction of new reservoirs and transit scheduling adjustments are key steps toward ensuring the sustainability and reliability of this crucial global trade route..

This article was written with inputs from Capt.Ricardo Caballero Vega a seasoned Panama Canal pilot..


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Hariesh Manaadiar
Hariesh Manaadiar
I am Hariesh Manaadiar, the Founder of Shipping and Freight Resource.. I have been in the dynamic shipping and freight industry for over three decades and have worked in several sectors.. I share my experiences and knowledge of the industry through this blog for those looking for help in the industry.. Stay subscribed for more free useful content about shipping, freight, maritime, logistics, supply chain and trade..


  1. There must have been also a remarkable mistake in the compution of water needed for serving the new size of the locks in hand with its water management. Be there extensive water recuperation system (either pulling water back by a side pipe or to the mirror cascade on the other side of the system, these troubles would not be so intensive. Also the water consumption of Panama city population definitely plays its part. To put all shortages on the climate changes – whatever impact the El Niňo may have – is another product of greenwashing!

  2. One extremely important point missed in your article the encroachment and outright invasion of the protected rainforest areas around the Panama Canal basin. The steady reduction of the forest coverage is now beginning to be evident. That rainforest is the greatest reservoir of water essential for the operation of the canal.


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