Persistent drought in Central America remains problematic for Panama Canal operations. For months, there has been a backlog of vessels with up to 123 ships awaiting transit recently, and as many as 160 ships in August, though it’s important to note that the seven-year average of the number of vessels waiting to pass through the canal is 90 ships. To address the situation, the Panama Canal Authority (PCA) has cut the number of slots for passage to 24 with indications that the allocation could reduce to 18 by February 1, 2024. One emerging effect of the transit throughput restriction is significant pricing increases in the daily auctions for transit slots. This month, Japan’s Eneos Group paid a record $3.98 million to secure a slot and still had to wait one week. “Wait, spend, or sail around South America” are the choices outlined by Freightos’ Judah Levine. As noted previously, container ships have not been significantly impacted as they receive priority status by virtue of long-standing agreements and advanced scheduling between carriers and the PCA. The proliferation of blank sailings has also tempered overall containership demand for passage. Still, Panama Canal water supply, further restrictions in throughput and vessel drafts, and routing alternatives – Suez, West Coast, Transloading, and even the revival of Mexico’s interoceanic railway – will be important to monitor into 2024.