- The Panama Canal has capped daily transits at 34 ships since Sept. 3 and will cut that to 32 on Sept. 15, as an intensifying El Niño has left rainfall across the canal's watershed about 34% below normal since May.
- A Panama-flagged gas carrier, operated by South Korea's SK Gas, paid a record $5.3 million in a late-August auction to skip the queue — nearly $700,000 more than a record set just weeks earlier.
- The squeeze is compounding a separate, months-long disruption at the Strait of Hormuz, intermittently shut since Iran closed it in response to February's U.S.-Israeli strikes, which has pushed more oil and gas cargo toward the Americas and the Panama route.
- Grocery staples like tomatoes and coffee spiked sharply this spring, but the most current federal data (through July) shows that spike easing — even as shipping analysts warn the new canal costs haven't fully reached shelves yet.
Only 34 ships a day are now allowed to cross the Panama Canal, a limit that falls again to 32 on Sept. 15 — and the cut is landing at the worst possible moment, just as vessels normally routed through a blockaded Strait of Hormuz are piling into the same narrow waterway. Two of the planet's busiest shipping arteries are effectively squeezing traffic at once, and freight analysts say the extra cost of moving cargo is already working its way toward supermarket shelves.
The canal restriction itself is homegrown: an intensifying El Niño has left rainfall across the watershed that feeds the canal's reservoirs about 34% below its historical average since May, forcing canal operators to conserve fresh water by turning ships away. Add in a Middle East war that has choked off a huge share of Gulf oil exports, and shippers scrambling for alternate routes have turned Panama into one of the tightest bottlenecks in global trade.
Two Bottlenecks, One Waterway
The Panama Canal now carries roughly 5% of global maritime trade, double the 2.5% share it handled in 2024, with about 70% of that traffic either starting or ending in the United States. The waterway moved an estimated $270 billion in goods during 2024 alone, and this year's volumes are running even higher.
That capacity is shrinking because of drought. Canal authorities issued back-to-back advisories in late August ordering the cuts — first to 34 vessels a day, then to 32 — while also trimming the maximum draft allowed for the biggest ships, meaning even the vessels that do get through are carrying lighter loads.
A War Half a World Away Rerouted Ships to Panama
The drought is colliding with fallout from a conflict that began when the United States and Israel struck Iranian targets on Feb. 28, prompting Iran to shut down the Strait of Hormuz, a passage that under normal conditions carries close to one-fifth of global oil supply. The strait has not stayed uniformly closed since then — a diplomatic framework in mid-June briefly restored a trickle of traffic — but fighting resumed in July, and by early September the corridor was once again seeing only a small fraction of its pre-war ship traffic.
Because Gulf producers can no longer ship nearly as much crude via Hormuz as before the conflict erupted, buyers have increasingly turned to the Americas instead. U.S. crude exports climbed 46% from a year earlier during the April-through-June stretch of 2026, reaching an all-time high of 61.6 million metric tons — close to 5 million barrels daily — much of it now funneling through the Panama route.
A Record-Breaking Ticket to Skip the Line
That extra demand has fueled a bidding war for the canal's limited walk-up slots. A Panama-flagged liquefied petroleum gas carrier, the G. Spirit secured priority passage for $5.3 million in a late-August auction — an all-time high that topped a $4.6 million bid placed by a sister vessel just weeks earlier. The winning bid came from SK Gas, a South Korean energy trading firm whose ship was otherwise facing an 11-day wait for an open booking slot.
Slot auction prices ran around $55,000 on average between last October and February; canal officials describe the recent jump as roughly threefold, though some trade publications tracking the largest-ship auctions specifically have reported far steeper increases.
What Shipping Analysts Say Comes Next
BIMCO chief shipping analyst Niels Rasmussen — BIMCO being the Baltic and International Maritime Council — said the tighter caps will push some vessels onto longer, costlier routes around Africa's Cape of Good Hope, adding that the combination of less capacity and pricier auctions is "likely to push freight rates higher." Container cargo moving between Asia and the U.S. East Coast, along with LPG shipments out of the Gulf Coast, are especially exposed.
Grocery Math: What Has Actually Changed for Households
Panama Canal delays translate into higher shipping costs, and higher shipping costs eventually show up in the price of imported goods — but the timing matters. Grocery staples popular in Latino households did spike sharply earlier this year: government data tracked through mid-May showed tomatoes up as much as 39% and coffee up 18.5% from a year before, pushing a family's weekly grocery basket from roughly $120 to about $145. That spring surge was driven largely by a 17% tariff on Mexican tomatoes and a diesel price spike of as much as 60% tied to the Hormuz conflict.
Since then, the picture has eased. The most recent U.S. Department of Agriculture tracking, through July, put retail tomato prices up about 13% year-over-year and overall grocery-store food prices up just 2.7% — both well below the spring peak. Coffee's per-pound price actually ticked down slightly from June to July, according to Labor Department figures. Economists caution that doesn't mean the Panama Canal squeeze is harmless; it means its effects haven't fully arrived yet. Higher costs to produce, store and transport food typically take three to six months to reach the shelf, and much of what shoppers have been feeling so far predates this particular round of shipping disruptions.
Benjamin Gedan, who directs the Latin America program at the Stimson Center, told CNN that canal bottlenecks ripple outward in ways that are "significant through supply chains and all the way to consumer prices." That warning applies as much to the months ahead as it does to what has already happened.
Bananas, the Peso and a Wider Latin American Squeeze
The disruption cuts both ways for communities with ties across the hemisphere. Colombia's national banana growers' association, Augura, expects the country's exports to fall at least 5% compared with last year, pointing to higher fertilizer costs tied to the Middle East conflict, a stronger peso squeezing grower margins, and a shortage of available cargo space that has forced older, less efficient ships back into service.
No Quick Fix in Sight
Xeneta analyst Peter Sand expects the disruption to keep compounding, telling reporters the situation will "get worse from a couple of months ago and well into 2027." With the Hormuz conflict unresolved and forecasters giving high odds that this El Niño intensifies through the rest of the year, the pressure on both chokepoints — and eventually on grocery carts — shows no sign of easing soon.
