Panama Canal transit peaks subside as Hormuz crisis eases

The Panama Canal is returning to its normal operational rhythm after a period of heightened transit activity driven by the crisis in the Strait of Hormuz. Ilya Espino de Marotta, the designated administrator, confirmed that daily transits have decreased from peaks of 40-41 to a more typical 36-37 ships.

This surge in traffic occurred when the canal was already experiencing a wetter-than-normal summer, keeping its vital artificial lakes at optimal levels. The increased demand, while not congesting the waterway, did drive up prices for transit slots, with some fetching as much as $4 million.

However, the outlook is shifting as a strong El Niño event, potentially lasting until 2027, begins to impact water levels. June rainfall was already 17% below average, prompting authorities to reduce the draft, the portion of a ship submerged in water, at the expanded canal's locks. This measure aims to conserve water, a critical resource for the world's only freshwater canal, which handles 3-5% of global trade.

The draft for the expanded canal, which accommodates 50% of annual cargo, has been lowered from a maximum of 50 feet. It was reduced to 49.5 feet on July 3 and will further decrease to 49 feet by July 24, with expectations of reaching 44 feet by the summer of 2027. Espino de Marotta expressed relief that the Hormuz crisis is resolving, allowing the canal to return to normalcy as it prepares for the challenges posed by El Niño.