As a historic El Niño-driven drought parches the Panama Canal’s watershed, the Caribbean Private Sector Organisation (CPSO) has issued an urgent alert for importers and governments across the Caribbean Community (CARICOM) to prepare for cascading supply chain disruptions, rising consumer prices and depleted inventory levels.
The prolonged dry spell has forced the Panama Canal Authority (ACP) to implement sweeping transit restrictions that have already upended global maritime shipping. Starting September 4, 2026, the agency capped daily transits at 32 to 34 vessels — a sharp reduction from normal scheduling — after data showed rainfall in the canal’s key water collection areas hit 34% below the historical average between May and August, with river inflows falling 44% short of typical levels. ACP has already warned that further water shortages are likely during the 2027 dry season from January to April, as El Niño’s intensity persists, raising the prospect of even tighter transit limits ahead.
In a formal statement released this week, the CPSO — an associate CARICOM institution representing regional private sector stakeholders including micro, small and medium-sized enterprises — released preliminary analysis quantifying the scale of the region’s exposure. The group estimates that between $8 billion and $10 billion in annual CARICOM imports, equal to 25% to 33% of the region’s total non-fuel import spending, relies on the constrained canal corridor. This figure includes both $4.5 billion to $7 billion in cargo that transits the canal directly, as well as additional goods that pass through the canal before being consolidated at U.S. ports for final shipment to Caribbean markets.
Cost pressures are already mounting across the sector. The CPSO confirmed that a priority auction slot for canal transit recently sold for a record $5.3 million, the highest bid ever recorded for access. Major global shipping lines including CMA CGM, MSC and Hapag-Lloyd have already implemented per-TEU (Twenty-foot Equivalent Unit) surcharges for all routes dependent on the Panama Canal, with additional rate hikes expected as low water forces further reductions to vessel draft limits.
These added costs will not be absorbed by shipping companies alone, CPSO officials emphasized. “Auction premiums and low-water surcharges do not stay on the carriers’ books,” explained Dr. Patrick Antoine, Chief Executive Officer and Technical Director of the CPSO, in the organization’s statement. “They are passed down the chain to importers, to distributors, and ultimately to the Caribbean consumer. When slot scarcity forces carriers to reroute or rationalise port calls, small Caribbean markets are typically the first to lose frequency and the last to regain it.”
CARICOM economies rank among the most import-dependent in the world, with nearly all food, manufactured goods and construction inputs reaching regional markets via maritime shipping networks that route through or are priced based on Panama Canal access. For consumers, the CPSO warns the risk comes in two overlapping forms: reduced product availability, driven by longer shipping lead times and depleted stock held by importers, and broad-based price increases as surcharges and extended voyage times push up final landed costs.
Compounding the challenge, the Panama Canal disruption comes at a time of already heightened global maritime volatility, with shipping through the Strait of Hormuz also impacted by ongoing conflict. “Two of the world’s critical maritime trade corridors are under pressure simultaneously, one by climate and one by conflict, lifting freight rates, war-risk premiums and fuel costs globally,” the CPSO noted. “For petroleum-importing CARICOM states, that compounds pressure on electricity, transport and food prices at the same time.”
To address the long-term vulnerability of regional supply chains, the CPSO has already advanced a proactive resilience framework with CARICOM leadership. In July 2026, the organization presented its Derisking CSME (Caribbean Single Market and Economy) Imports methodology to the CARICOM Heads of Government Breakfast Meeting in Saint Lucia. The tool maps the region’s exposure to extra-regional supply shocks on a product-by-product basis, and identifies opportunities for intra-regional production and alternative trade corridors to replace vulnerable long-haul imports that rely on chokepoint routes like the Panama Canal.
“Every percentage point of import demand we can shift to regional supply is a percentage point insulated from canal auctions, low-water surcharges and chokepoint conflict,” Dr. Antoine said. “Regional resilience is not built during a crisis. It is built before one.”
The CPSO is currently urging immediate proactive planning from importers, advising stakeholders to enter early discussions with shipping carriers and logistics providers to map alternative routing, estimate potential surcharge costs, and adjust inventory plans for the final quarter of 2026 and the 2027 dry season. The organization also confirmed it continues to advance the region’s trade connectivity agenda alongside CARICOM leaders, the World Bank’s Caribbean Reconnect Programme, and a regional ferry service initiative currently under review by CARICOM heads of government.