Due to persistently low water levels in the Panama Canal, shipping companies are facing a new round of surcharge adjustments, and cargo owners need to pay attention to related cost changes.

Mediterranean Shipping Company (MSC) issued an announcement on Tuesday,introducing a new Panama Canal surcharge, set at $100 per TEU, effective August 19. The fee applies to all cargo types shipped from Southeast Asia, China, South Korea, and Japan to the U.S. East Coast and the U.S. Gulf Coast, due to restricted canal operations.

Meanwhile, CMA CGM announcedan increase in its Panama Canal surcharge, raising it from $40 to $100 per TEU, effective July 25. The fee applies to all cargo shipped from Asia to the East Coast of Central America, the North Coast of South America, the Caribbean, and Manaus, including dry containers, reefer containers, and special equipment.

The France-based shipping company explained to customers that the surcharge adjustment stems from recent drops in Panama Canal water levels, and the company is adjusting related fees to "address the resulting operational costs."

Throughout the summer, the Panama Canal Authority has continued to impose maximum allowable draft restrictions on vessels transiting the Neopanamax locks.

An ocean-going vessel loaded with colorful containers is transiting the Panama Canal.
An ocean-going vessel is transiting the Neopanamax locks of the Panama Canal. The Canal Authority plans two more rounds of draft reductions for vessels using these locks this summer.
Image source: Canal de Panamá

The Canal Authority set the draft limit at 49.5 feet earlier this month, and then in ashipping advisoryannounced that the threshold would be lowered to 49 feet starting this Friday. Another round of draft restrictions will take effect on August 15, further reducing the limit to 48.5 feet.

These draft restrictions are part of water conservation measures implemented by the Canal Authority in preparation for a possible El Niño climate pattern in the second half of 2026. The Authority had previouslytaken multiple water-saving preparatory stepsto guard against the impact of extreme weather on operations.

Booking restrictions are another water-saving measure the Canal Authority is considering. According to apress releaseissued on July 22, the probability of a severe El Niño event has risen significantly, from 25% in April to 81% in July.

"Capacity restrictions are likely to be implemented, not limited to draft restrictions but also including a reduction in daily booking slots," said Ricaurte Vásquez Morales, Administrator of the Panama Canal Authority, during a conference call. Morales emphasized that the timing and scope of any restrictions will depend on market conditions.

As of Thursday, the Canal Authority had not implemented booking restrictions due to low water level concerns, a spokesperson told Supply Chain Dive.

However, according to freight forwarder Norton Lilly Panama, the canal hassuspended booking slots in the third daily auction. According to Panamanian shipping agency Adimar Shipping, the booking slots offered in the third auction are part of the canal's booking system, allowing vessels to arrangetransit on short notice。

The last time water levels dropped to low points was between 2023 and 2024, when drought conditions led toextended transit timesandhigher transit fees. In 2023, a dry spring combined with the impending El Niño weather pattern made the shipping route wary oflow water levelsin the nearby Gatun Lake, and related restrictionscontinued into 2024. At that time, the canal also imposed draft restrictions and limited bookings to conserve water.

According to global market intelligence firm ICIS, the Panama Canal is considered a major route for global trade between Asia and the U.S. East Coast and Gulf Coast. ICIS data shows: "In 2024, 52% of transiting vessels through the canal had their origin or destination ports in the United States. Over 76% of transiting cargo had the United States as its origin or destination."