Panama Canal

The Panama Canal crosses the Isthmus of Panama, connecting the Atlantic and Pacific Oceans and sparing ships the long voyage around Cape Horn. Unlike Suez, it is a lock canal: ships are lifted about 26 metres to Gatún Lake, an artificial reservoir, and lowered again on the other side. The transit is roughly 80 km and takes eight to ten hours.

History

A French attempt under Ferdinand de Lesseps collapsed in the 1880s amid disease and financial scandal. The United States completed the canal in 1914, after supporting Panama’s secession from Colombia and conquering yellow fever and malaria in the Canal Zone. Under the 1977 Torrijos–Carter Treaties, the canal passed to Panamanian control at the end of 1999; it is operated by the Panama Canal Authority (ACP), an autonomous state entity.

Panamax and Neopanamax

The original lock chambers (33.5 m wide) defined the Panamax ship: about 4,500 TEU for containerships and 60,000–80,000 DWT for bulkers — dimensions that shaped world shipbuilding for a century. A third set of locks opened in 2016, admitting Neopanamax vessels of about 14,000 TEU and, significantly, the large gas carriers serving US LNG and LPG exports. Its principal trades link Asia with the US East Coast (containers), and carry US grain and energy exports westbound.

The water problem

The canal’s locks consume enormous volumes of fresh water from Gatún Lake, which also supplies Panama City. Severe droughts — most acutely in 2023–24 — forced the ACP to cut daily transit slots and draft limits, producing long queues and record auction prices for priority slots, and pushing some cargo to Suez, the US land bridge, or the Cape. Long-term responses under study include damming the Río Indio to create an additional reservoir. Climate-driven water stress is now the canal’s defining strategic challenge.