Panama Canal Cuts Daily Slots and Draft Limits as El Niño Returns, and an LPG Carrier Pays a Record $5.3 Million Toll

The Panama Canal is rationing water again. Starting today, September 3, the Neopanamax locks offer nine booking slots a day, and the older Panamax locks 25, dropping to 23 from September 15. Maximum draft in the new locks came down to 48 feet (14.63 meters) on September 2, and it falls to 47.5 feet (14.48 meters) on October 1.

Two days ago, on September 1, an LPG carrier paid a record $5.3 million transit toll to get through. That beats the peak of the 2023-24 drought, when a slot auction went for nearly $4 million.

A good year, then the forecast turned

It's a quick reversal. For nearly two years the canal ran without draft limits, thanks to heavy rain in 2025 and an unusually wet 2026 dry season. The first nine months of fiscal 2026 (October through June) were strong. There were 10,726 transits, up 5.2 percent, and about 390 million PC/UMS tons, up 7.2 percent. That's about 35 transits a day. Revenue rose 17 percent to $4.8 billion.

Then the weather outlook changed. In April the chance of a severe El Niño stood at about 25 percent. By July it was 81 percent. El Niño brings dry conditions to Panama, and the canal runs on rain. Every ship through the locks uses millions of gallons of fresh water from Gatun Lake, and that lake is also Panama City's drinking water supply.

The canal authority says it's acting early, citing below-expected rain in the watershed and the need to "support the long-term sustainability of transit operations." It also changed its booking system for Neopanamax ships on August 30 to give carriers more flexibility and encourage efficient use of water.

Why the $5.3 million toll

The record toll says more about the Middle East than about Panama.

With Hormuz closed, Gulf LPG exports have collapsed. Asian buyers, especially in Japan, Korea, China and India, have turned to US LPG, most of it loaded on the Gulf Coast. The shortest way from Houston to Asia is through Panama. The alternative is the long way around the Cape of Good Hope. With LPG prices high in Asia and each cargo worth a lot, some owners are willing to pay whatever it takes to cut weeks off the trip.

Fewer slots and more demand from energy carriers is exactly the mix that pushes auction prices up.

Who gets squeezed

Container lines on the Asia to US East Coast run are next. Carriers have started adding Panama surcharges of $200 to $1,000 per 40-foot box for affected cargo. Some are shifting services to US West Coast ports with rail inland, or to Suez now that the canal is open to them again. Shanghai to New York spot rates were already above $10,000 per box.

Bulk carriers moving US grain to Asia face the same problem at the worst time. The US harvest is moving to export terminals now, and fewer slots with lower drafts mean lighter loads or longer routes.

Longer-term fixes

Panama has a plan for this. The Rio Indio reservoir project would add a new source of water for the canal, and the authority plans to put it out to tender in 2027. It's also working on a wider modernization program, including an LPG pipeline and new port terminals. None of that helps this season.

For shipping, the canal is now back on the list of chokepoints that can't be taken for granted. It's a short list, and this year it includes almost every one that matters.