NOAA has issued an El Niño advisory, putting the odds of a very strong El Niño at 63% heading into winter. That revives the drought threat that reduced Panama Canal capacity and disrupted global shipping in 2024.
The warning: NOAA says El Niño conditions are already here and are likely to strengthen through the winter in what could be one of the strongest events since 1950. Risk firm Everstream calls it a “Super El Niño.” Its chief meteorologist, Jon Davis, told DC Velocity it is “one of the biggest meteorology events we’ve seen [in] many, many decades,” with “major ramifications in supply chains.”
The canal's response: The Panama Canal Authority is acting early. Next month, it will lower the maximum draft for the largest ships from 50 feet to 49.5 feet, a precaution based on lessons from the 2023-2024 drought. Draft measures how deep a loaded ship sits in the water, so a lower limit means lighter and less-full ships.
For now the canal is operating near full capacity at about 38 ships a day, and its main reservoir, Gatún Lake, remains high after a wet La Niña. Traffic is actually up about 8% this year, according to BIMCO.
The 2023-24 precedent: The last drought shows what is at stake. It was the worst on record for the canal:
Daily crossings fell from 36 to 38 ships in mid-2023 to just 18 by February 2024
The maximum draft dropped to 44 feet
Fewer than 250 container ships crossed each month, down from 300-330
Carriers rerouted around southern Africa and added congestion fees. LNG tankers left the route and were slow to return
The canal authority says it does not expect transit limits through the end of 2026. But El Niño’s strongest effect on water levels usually arrives the year after it begins, which points to the real risk in 2027. This year’s wet season needs to refill Gatún Lake, so water levels are the key indicator to watch. If they fall short by the fourth quarter, the pressure arrives just after the canal’s current assurance period ends.
