Panama Canal Sees Post-Drought Spike in Container Shipping
Panama Canal Sees Surge in Container Traffic
The Panama Canal is experiencing a remarkable increase in container ship traffic, outpacing the Suez Canal as it struggles to regain its former prominence. According to Alphaliner, container ship transits through the canal reached an all-time high in the first five months of the year, marking a 10.2% increase compared to the same period last year. This surge is largely driven by the rise of Neo sub-Panamax vessels, which have become a significant part of the canal’s shipping landscape.
Record Container Ship Transits and Neo Sub-Panamax Growth
In the first five months of 2023, the Panama Canal recorded a historic number of container ship transits, with a 10.2% year-over-year increase. This growth is particularly notable as it surpasses the previous record set in 2022 by 4.1%. The rise in traffic is attributed to the increasing use of Neo sub-Panamax container carriers, which can carry between 7,500 and 10,000 twenty-foot equivalent units (TEUs). Since the start of 2025, these vessels have accounted for over 25% of all container traffic through the canal, with a staggering 30% more Neo sub-Panamax ships transiting compared to last year.
Despite facing challenges such as a months-long drought that led to transit and draft restrictions, container ships have remained largely unaffected. The Panama Canal Authority (ACP) prioritized bookings for container ships over other types of vessels, ensuring their continued operation. In fact, container ships represented nearly 24% of the total 7,083 crossings in the first four months of the year, with Neo-Panamax vessels making up 58% of the 1,677 crossings during this period.
Geopolitical Tensions and Future Developments
The Panama Canal is not only a vital trade route but also a focal point of geopolitical tensions, particularly between the U.S. and China. Following former President Donald Trump’s comments about reclaiming control over the canal, a consortium led by Mediterranean Shipping Company (MSC) and BlackRock proposed a $23 billion acquisition of two ports near the canal. This deal, which is still awaiting approval, has drawn criticism from China and raised concerns about reduced competition in the shipping industry.
If the acquisition goes through, MSC would solidify its position as the world’s largest container operator, potentially controlling 8.3% of the global market share. Currently, MSC operates a fleet of 900 vessels and owns over 70 terminals worldwide. Industry experts have expressed concerns that this consolidation could lead to higher shipping rates and reduced competition, impacting other players in the market. However, supporters of the deal argue that significant market shares still remain with state-owned Chinese companies, ensuring a competitive landscape.
