Panama Canal to reduce shipping over El Nino-fuelled drought

The Panama Canal will begin reducing the number of ships transiting through it starting September 3 due to drought caused by the El Nino phenomenon, according to the canal's operator. The daily vessel allowance will decrease from 36 to 34 ships, and further to 32 by September 15. Central America is experiencing a severe drought fueled by the El Nino weather pattern, which has caused rainfall in the canal's watershed to drop by 34 percent compared to its historical average.

The Panama Canal handles 5 percent of global maritime trade and 40 percent of US container traffic. Canal authorities have already implemented other water conservation measures, such as lowering the maximum draft for large ships. However, with the upcoming reduction, waiting times for unreserved ships will increase. Ships without reservations make up 10 percent of canal traffic, with the remaining slots auctioned off.

Before the Iran war, the average winning bid for these auctions was $135,000, but one shipping company paid $4 million in April. While the canal's main users are the United States, China, Japan, Chile, and South Korea, water is a sensitive issue in Panama as the lakes that feed the canal also supply water to half of the country's 4.2 million people.

El Nino, which occurs every two to seven years, is expected to be one of the strongest on record this year. Honduras has placed 80 percent of its territory under a drought alert.