Sunita Somvanshi
One ship paid a staggering $4 million this month to jump the line at the Panama Canal, a vivid sign that drought and a strengthening El Nino are tightening one of the world’s most important shipping chokepoints and pushing costs toward consumer shelves.
In early August, dozens of vessels were waiting for their turn. One chemical tanker had been stuck for more than a week; another over a month. Then on Aug. 10 a large container ship paid $4 million to fast-track its trip, leaving others in maritime limbo. Logistics company Flexport, which had 30 containers aboard that ship, said the backlog at the canal’s Pacific end is the worst since May.
“The ripple effects are significant through supply chains and all the way to consumer prices at stores,” said Benjamin Gedan, senior fellow and director of the Latin American program at the Stimson Center, a nonpartisan think tank.
The Panama Canal moves ships through a system of locks fed by freshwater from Lake Gatun. It carries about 5% of the world’s shipping and is the single most important shortcut between the Atlantic and Pacific, saving time and fuel. The United States is its biggest user: about 70% of goods moving through it are coming to or going from the U.S.
During the extreme droughts of the 2023 and 2024 El Ninos, Lake Gatun’s levels dropped to historic lows and the number of ships that could pass fell from 36 per day to 24. NOAA declared the start of a new El Nino in June, and it is expected to be historically strong, peaking between October and December. For Panama, that means a wet season already drier than usual is likely to get worse.
The Panama Canal Authority manages water levels and transit slots, and the U.S. National Oceanic and Atmospheric Administration tracks the El Nino driving the dry spell. Forecasts this year put high odds on a strong event: an El Nino outlook from NOAA put 61% odds on the pattern, and Australia has braced for what could be the strongest El Nino since 1950.
For now, the cost of skipping the queue is measured in millions, but analysts say the broader bill could arrive in higher prices for medicine, fuel and everyday goods carried through the canal.
