Published on 4/30/2026
In light of the unprecedented disruptions witnessed by global trade routes, the Panama Canal has returned to the forefront of events, as an alternative artery that is becoming more important day after day, with record congestion and a sharp rise in transit fees, following the repercussions of the closure of the Strait of Hormuz and the disruption of energy supplies and supply chains.
The canal, which is the second most important artificial waterway after the Suez Canal, is facing mounting pressure today as it becomes a major option for shipping companies, especially Asian ones, to transport oil, gas and goods between the Atlantic and Pacific oceans, in light of the worsening geopolitical crisis in 2026.
The roots of the canal idea go back to the sixteenth century, when the Spanish explorer Vasco Núñez noticed the narrow distance separating the two oceans, before it was later re-proposed by US President Thomas Jefferson in the eighteenth century, without it seeing the light at that time.
The first serious attempt came at the hands of the French, benefiting from their success in building the Suez Canal, but the project faltered due to natural challenges and tropical diseases, and was eventually abandoned.
Later, the United States took over the project at the beginning of the twentieth century, and completed it after a decade of hard work, at a cost of $380 million, and with the participation of tens of thousands of workers, of whom about 20,000 died, before the canal was officially opened in 1914.
Influence struggle
The canal remained under American control for decades, before its management was gradually transferred to Panama, according to agreements signed by US President Jimmy Carter and his Panamanian counterpart Omar Torrijos, until Panama assumed full control in 1999.
In a recent development, US President Donald Trump revived the controversy over the canal, hinting at the possibility of restoring American control, which was met with a categorical rejection by Panamanian President Jose Raul Molino, who stressed that his country’s sovereignty over the canal is “non-negotiable.”
The canal represents a unique engineering achievement. It shortened the sailing distance around the American continent from 21,000 kilometers to only about 8,000, and connects more than 160 countries and 1,700 ports around the world, with about 6% of the volume of global trade passing through it annually.
The canal relies on a system of water locks, which raise ships to a height of 26 meters above sea level to cross the artificial Gatun Lake, before lowering them again, in a complex process that consumes huge amounts of water and takes between 8 and 10 hours for each trip. The 2016 expansion allowed the passage of three times more giant ships than was previously possible.
Increasing pressures
As the crisis escalated in the Middle East, the canal turned into a major alternative route, recording the transit of 6,288 ships between October 2025 and March 2026, an increase of 224% compared to the same period of the previous year. Transit fees have also doubled by more than two and a half times, in light of increasing demand from shipping companies, especially for transporting liquefied natural gas from the United States to Asia.
The head of the canal, Ricorte Vasquez, said that the corridor is operating at its maximum capacity, with a daily transit of between 36 and 38 ships, at a time when the administration is preparing to increase the number of gas tankers allowed to pass daily, after it was previously limited.
In light of this pressure, some companies resorted to paying exceptional sums to obtain priority transit, amounting to about $4 million, while the average cost of one ship’s transit increased from $140,000 to $385,000 in just two months, according to media reports.
Internally, the canal formed an economic pillar for Panama, with revenues reaching $5.7 billion in 2025, but today it faces an unprecedented test of its carrying capacity. Globally, the canal has become the last line of defense for the continued flow of trade, at a time when geopolitical crises are redrawing the map of maritime transport and energy routes around the world.
