Citing drought, Panama Canal restricts cargo ships to lighter weights

The Panama Canal is restricting cargo loads twice in the coming weeks as drought lowers its water levels.

The canal will reduce the maximum depth a loaded ship can sit in the water to 48 feet on Aug. 26 and 47.5 feet on Sept. 3, down from 50 feet. Shallower limits mean vessels must ride higher, and riding higher means carrying less. The number of daily crossings will not change, but each ship will move less freight.

The constraint is Gatun Lake, the freshwater reservoir that lifts ships over the isthmus and loses millions of gallons per passage. An El Niño pattern has reduced the rainfall that refills it. The authority said the new limits extend conservation measures in place since December 2025.

Carriers have responded with surcharges of $200 to $1,000 per large container beginning mid-September, according to Freightos, which described the cuts as far milder than the 2023 restrictions.

Those costs typically pass to importers and eventually to retail prices, with retailers currently building holiday inventory. Jackson Wood of Descartes said July imports showed demand holding firm, though tariffs, Middle East shipping risk, tighter canal limits and Red Sea disruption are all weighing on costs, capacity and delivery schedules.