Panama Canal Drought 2026: What Importers Need to Know with Lori Ann LaRocco
Supply Chain Unchained
The Panama Canal is man-made and fed entirely by rainwater. When it stops raining, global shipping reroutes and importers pay for it.
Water levels feeding the Panama Canal are already below where they were before the last historic drought, and the industry is bracing for what some are calling a “Godzilla” El Niño. In this episode, Greg Amanatidis sits down with Lori Ann LaRocco, President of LaRocco Consulting, head of the Containers Don’t Lie Symposium and a CNBC journalist for 25 years, to break down what’s happening at the canal and what it means for anyone moving freight into the US.
Lori Ann explains why a single auction slot has climbed to $5.6 million, why the ground around Gatun Lake is now too dry to absorb incoming rain, and how carriers and shippers are already working around the canal, from MSC’s mega-ships into Long Beach to the land bridge across Panama. She also covers the wider pressures on importers right now, including diesel prices, trucking capacity and petrochemical feedstock shortages, and what to watch in Australia–US and US–China trade.
Key Numbers from the Episode
2.5 ft
How much lower Gatun Lake is than the same point in 2022, before the last historic drought
$5.6M
What vessels are willing to pay for a single canal auction slot, and rising weekly
15
Bidders per auction slot, up from a typical two or three
37 → 22
Fall in daily canal transits during the last El Niño
Figures as discussed by Lori Ann LaRocco in the episode, recorded September 2026.
What We Cover
- 0:00 Why a Panama Canal auction slot has reached $5.6 million, and why bidders per slot have jumped from two or three to fifteen
- Why “just in time” no longer works: how trade wars, physical conflict and weather are combining to gum up logistics, and why Lori Ann’s advice is simply to get it in, be creative and pivot
- How petrochemical feedstock shortages are flowing through to the cost of everyday goods, from clothing and sneakers to fertiliser
- MSC’s weekly service carrying 23,000 containers from Asia direct to Long Beach rather than queuing for the canal
- 8:10 How the canal works, why it depends on rainwater, what draft restrictions mean for vessel loads, and why dry ground means new rain runs off instead of refilling Gatun Lake
- Why the drought matters for US East Coast importers and for Australian beef exporters who normally route through the canal
- 12:27 The alternatives: West Coast ports with rail or truck across the US, Seattle–Tacoma depending on the vessel string, Mexican ports and their landside limits, and the land bridge across Panama
- Why drayage, diesel prices and the reduced pool of US truck drivers are adding pressure to those workarounds
- 18:30 How the canal auction system actually works, why it isn’t “skipping the line”, and why the older Panamax locks and the Neopanamax locks differ in how they use water
- What happens if a vessel misses its slot, and why delays at origin ports like Shanghai can knock on to canal bookings
- How higher logistics costs reach consumers, and why “inflation brews in the warehouse”
- 25:36 What’s ahead for Australia–US trade, including US demand for Australian beef and the digital tax question, plus what to expect from the US–China meeting
Guest
Lori Ann LaRocco
President, LaRocco Consulting
Head of the Containers Don’t Lie Symposium. CNBC journalist for 25 years
“Trade is agnostic. It has to flow. It’s like water, and trade will flow the path of least resistance.”
Lori Ann LaRocco, President, LaRocco Consulting
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