Sparse rainfall linked to El Nino lowered water levels in the Panama Canal, prompting authorities to restrict crossings, and the surge in Magellan traffic began in July and is expected to continue as the cruise season gets underway, according to the Punta Arenas Maritime Governor’s Office, part of the Chilean Navy. Bloomberg Intelligence analyst Kenneth Loh said Middle East disruptions have also prompted some operators moving goods from South America and West Africa to Asia to avoid the region and reroute via Magellan. The drought is the primary culprit, but the Iran war is compounding the diversion.
The increase was detected among vessels of 60,000 to 65,000 gross register tons, per local pilotage statistics covering January 2025 through September 24, 2026. Sailing via Magellan adds distance and fuel costs, but its toll-free passage offers an alternative when Panama’s transit restrictions, queues and premium auction fees bite. The data land alongside this week’s WMO El Nino warning, which keeps the drought risk on the forward calendar for Panama transits into next year.