A second round of draft limits coming to the Panama Canal could limit capacity on many of the container ships calling the US East and Gulf coasts, keeping spot ocean freight rates firm through the remainder of the peak shipping season.
The Panama Canal Authority (ACP) said Wednesday its Neopanamax locks, which handle the largest vessels that can transit the canal, will have a maximum authorized draft of 48 feet by Aug. 26, with the draft getting cut to 47.5 feet by Sept. 3.
Those would be the fourth and fifth cuts to the 50-foot draft of the Neopanamax locks that the ACP has announced since the start of July. The draft limits stem from a strong El Niño weather pattern that’s causing a drought in Panama and limits the amount of rainfall in Gatun Lake, which replenishes the locks with fresh water after each ship transit.
The ACP said it was making the latest adjustments based on its experiences from the last severe El Niño to hit the region during 2023 and 2024. At their lowest point around July 2023, the Neopanamax locks were limited to ships with a draft of just under 44 feet.
“The draft adjustment will not affect the number of daily vessel transits. Instead, it reflects water conservation and resource management measures that have been in place since December 2025 as part of preparations for the 2026 dry season,” the ACP said.
“The measures result from operational planning informed by lessons learned during the 2023–2024 period, as well as hydrological analyses and historical data that support the canal’s operational decision-making process,” the authority added.
Less leeway at NY-NJ
While the number of ships transiting the canal won’t be affected, their capacity will be.
The relation between vessel draft and container capacity can vary depending on the type and weight of the cargo. But one rough estimate is that a 10,000-TEU ship can lose about 450 TEUs of capacity for each foot of draft limit. Because the canal’s locks use freshwater, Neopanamax vessels also forgo a little capacity due to the greater buoyancy of saltwater.
In anticipation of the draft limits, ocean carriers have been implementing surcharges on trans-Pacific services that use the canal. Ocean Network Express put a $150-per-TEU fee on its Asia-US services that use the canal, effective Aug. 10. Other carriers recently adding canal fees include Cosco, Yang Ming and Zim Integrated Shipping Services, according to forwarder sources.
Spot ocean freight rates are also responding to possible capacity cuts as the traditional peak shipping season kicks into gear during late summer. Spot rates from Asia to the US East Coast are now being quoted at $9,700 for a standard dry container. Platts, a sister company of the Journal of Commerce within S&P Global, pegged North Asia to East Coast rates at $9,900 per FEU as of Aug. 5, up 10% on the week and the highest in more than two years.
The late-August draft limit along the Panama Canal will put a hard limit on the largest vessels calling the US East Coast. At the Port of New York and New Jersey, which is first call for many trans-Pacific services, the deepest vessel draft generally allowed in New York Harbor is about 48 feet, according to the US Coast Guard Vessel Traffic Service. Vessels that deep are only allowed to transit under very high tide conditions, according to a Coast Guard spokesperson, adding that vessels need tolerance for New York Harbor’s 50-foot depth.
Since the start of May, 162 of the 291 Neopanamax ships that called the East and Gulf coasts passed through the Panama Canal, according to Sea-web, a sister company of the Journal of Commerce. The average container capacity on those vessels was about 12,000 TEUs.