With Historic Drought, Years of Underinvestment, and Negative Changes in Global Supply Chains, the Panama Canal—often called "Pancanal"—is Facing a Critical Situation. Cargo ships are waiting for weeks to reach their destinations, raising transportation costs and creating trade issues between the Americas, Asia, and other markets. Amid the crisis, crossing times that used to take up to ten hours have doubled.
This problem has been ongoing. In 2023, the waterway had to reduce its daily ship traffic from 38 to 22 due to the ongoing water crisis.

For Jackson Campos, foreign trade specialist and Director of Institutional Relations at AGL Cargo, the canal significantly shortens transportation time and costs between continents, avoiding the long and perilous route around Cape Horn at the southern tip of South America.
“It is estimated that about 6% of global maritime trade passes through the canal, highlighting its strategic importance for the efficient flow of global goods,” says Campos.

For Brazil, the Panama Canal is the most economical option for trade with North America, and the ongoing crisis has both direct and indirect implications. Campos explains that Brazilian companies exporting to the U.S. West Coast or to Asia will face delays and higher logistics costs due to the need for longer alternative routes.

Brazil has been preparing for the worsening water shortages in Panama. The Central Bi-Oceanic Railway Corridor is a key project that will connect Atlantic ports to the Pacific coasts of Chile and Peru, passing through Bolivia.

World Bank data shows that Brazil directs 48% of its exports to Asia, 18% to Europe, and 30% to the Americas (17% to South America and 13% to North America). Imports mainly come from Asia (41%), North America (23%), and Europe (21%).

In an interview with The New York Times, Ricaurte Vásquez Morales, Administrator of the Panama Canal, mentioned that the creation of a new reservoir is being considered as a potential solution to the problem. The plan could result in the displacement of about 2,000 people, as the idea is to build the dam on the Indio River, southwest of Gatun Lake, which would flood the homes of predominantly poor people.