Drought driven by El Niño has caused Panama Canal water levels to drop, leading to a sharp decline in vessel transits and directly impacting global maritime efficiency. At the same time, revenue from Egypt's Suez Canal has fallen significantly due to factors such as Red Sea diversions. With both critical waterways under pressure, global shipping costs could rise, further affecting the transport of bulk commodities like coal, grain, and fertilizers.
Prolonged drought conditions triggered by El Niño have caused Panama Canal water levels to drop significantly, resulting in a sharp decline in vessel transits compared to 2021 year, 12 month. As a critical maritime link between the Pacific and Atlantic Oceans, reduced water levels restrict vessel draft limits and lower transit efficiency. Consequently, some large cargo ships are forced to reduce cargo loads or reroute, increasing both transit times and logistics costs.
Canal authority data indicates that drought-induced water pressure is reshaping global shipping routes. For container ships, bulk carriers, and tankers, diminished capacity requires rescheduling of transport plans, creating heightened operational uncertainty for ports, shippers, and shipping companies alike.
Meanwhile, Egypt's Suez Canal revenues are also under pressure from Red Sea tensions and shipping diversions. Revenue losses for the Suez Canal in 2024 are estimated at $3 billion, accounting for approximately 5% of its GDP. Average import/export volumes across the top 20 ports in the Red Sea and Gulf region fell by 8%, highlighting significant ripple effects among key global waterways.
Currently, dry bulk shipping rates are surging sharply, driven by demand for coal, grain, and fertilizers alongside Red Sea diversions. If the Panama Canal drought persists and Suez Canal revenue pressures continue to mount, the global maritime supply chain may tighten further, leading to increased volatility in international trade and commodity prices.