When the Panama Canal ran short of water

The Panama Canal has no pumps lifting ships over the continental divide. It has rain. Water falls on the watershed, collects in two artificial lakes, and runs downhill through the locks under gravity. That design worked for more than a century without anyone giving it much thought. In 2023 the rain came up short, and the whole shipping world noticed.

A canal that runs on fresh water

Most people picture the canal as a ditch between two oceans. It is closer to a staircase. Ships climb from sea level to Gatun Lake, which sits roughly 26 metres above the oceans, cross it, and step down again on the far side. Gatun Lake was created by damming the Chagres River. Alajuela Lake, upstream, acts as a reserve that feeds Gatun when levels drop.

Every lockage needs water to fill the chambers. When the ship leaves, that water drains toward the sea and does not come back. Fresh water, in other words, is the fuel.

The same lakes supply drinking water for a large share of the people living in and around Panama City and Colón. Often cited figures put it at around half the country’s population. The canal and the taps draw from one account.

What one transit costs in water

The original locks, opened in 1914, are often described as using something like 200 million litres of fresh water per transit. That is a rough figure, and it varies with the size of the vessel and the traffic pattern, but the order of magnitude is the point. A single passage is a lot of lake.

The wider Neopanamax locks, opened in 2016, were built with water-saving basins. These are side reservoirs that catch part of the water from each lockage and reuse it for the next. The commonly quoted share is that they recycle somewhere around 60 percent. Even so, each Neopanamax transit still sends a big volume of fresh water to the ocean, and the ships are larger.

So the system is efficient for what it is. It is also a system that spends water every day of the year.

What went wrong in 2023

Panama has a dry season and a rainy season. The rainy season normally refills the lakes. In 2023 it underperformed. A strong El Niño pattern pushed rainfall below normal across the region, and the year ended up among the driest on record for the canal watershed. Gatun Lake fell well under its usual levels for that stage of the year.

The canal authority could not make it rain. It could only change how much water each day’s traffic consumed. Hence the restrictions.

Draft, in plain terms

Draft is how deep a ship sits below the waterline. A loaded vessel sits low; an empty one rides high. The canal sets a maximum draft for each lock set, based on how much water is available in the lake. Less lake means less depth over the sills and in the channels, so a ship that could pass fully loaded last year might now be turned away at the same weight.

In 2023 the authority lowered the maximum permitted draft for Neopanamax vessels in steps, going from the usual figure of about 50 feet to somewhere around 44 feet at the lowest point. Each foot of draft that disappears means cargo that the ship cannot carry through. For a big container vessel, a few feet can mean a few hundred boxes left behind or moved on another ship.

Fewer slots, higher bids

Draft was the first lever. The second was the number of ships. The authority reduced the daily number of transits well below the normal level of the high 30s, and for stretches of late 2023 and early 2024 the figure sat around two dozen or fewer. Different lock sets had different caps.

Fewer slots meant queues. Ships waited at anchor on both sides, and waits of many days were reported at the worst moments. The authority had already run a booking system for slots. Under pressure, it also auctioned a limited number of them, and some bidders paid large premiums to jump the line. Those premiums were reported publicly, but treat any single number you read with care.

The vessels that could not or would not wait had four choices:

• Lighten the load and go through at a lower draft.
• Pay for an earlier slot.
• Reroute around Cape Horn or through the Suez Canal, where geography allowed.
• Offload at one coast and move the cargo overland by rail or truck.

What it meant for importers

If you import into Panama, your cargo might never touch the canal. Containers from China often arrive at the Pacific side, and ones from the Gulf of Mexico or the US East Coast tend to arrive on the Atlantic side. But shipping lines run networks, not single lanes. A delay in the canal ripples through vessel rotations, and a ship held for a week at anchor in Colón means a ship that arrives late everywhere else on its loop.

The practical effects for an importer looked like this. Schedules slipped. Carriers added surcharges for delays or drought, often labelled with a canal reference. Some services were rerouted or cancelled for a sailing. Cargo with a hard date, such as seasonal goods or a project deadline, suffered most.

The sensible response was dull and effective. Ask for realistic buffers. Book earlier. Ask your forwarder which services transit the canal and which do not. Keep an eye on the lake level, which the authority publishes.

The rains return

Through 2024 the situation eased. The rainy season delivered more water, the lake climbed, and the authority raised the permitted draft and added slots back in stages. By the second half of that year transit conditions looked much closer to normal, though the authority was careful to say so in steps rather than all at once.

The easing did not close the question. Panama has discussed new water sources for the canal for years, including a reservoir on the Indio River, which would be a major and contested project because it would flood farmland and displace communities. Whatever happens with it, the 2023 episode gave that debate a hard deadline.

One waterway, a lot of weight

The canal is often cited as carrying something like 5 percent of world maritime trade. That share is small enough that the world adjusts when it shrinks, and large enough that you can feel the adjustment. In 2023 the adjustment came through longer voyages, higher costs on some trades, and a scramble for rail capacity in North America.

The lesson for anyone importing is narrow and practical. A supply chain that depends on one choke point has one point of failure, and the cheaper route is the one most exposed. You do not need to abandon it. You do need a plan B on the shelf: a second routing, a second port, and a quote that is still valid when the first plan stops working.

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