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The Panama Canal
The rain-fed staircase of locks that lifts ships across the Isthmus of Panama between the Atlantic and the Pacific
Every ship that crosses Panama climbs a mountain of water. The Panama Canal raises vessels about 26 meters in its locks to an artificial lake, sails them across the isthmus, and lowers them to the other ocean, sparing them a voyage of thousands of kilometers around South America. Each lockage draws on fresh water from rain-fed lakes, which makes this the only great chokepoint that can be throttled by drought, as it was in 2023 and 2024. It is also a national symbol: run by Panama since 1999, it earned $5.7 billion in fiscal 2025 and became the focus of a sharp dispute with the United States.
The canal runs about 82 kilometers from Colón on the Caribbean to Balboa beside Panama City on the Pacific, oddly heading southeast as it crosses the S-shaped isthmus. Ships climb through locks at each end into Gatun Lake, a reservoir created by damming the Chagres River, then pass the Culebra Cut through the continental divide. The original Panamax locks of 1914 run alongside wider Neopanamax locks opened in 2016, which take ships drawing about 15 meters and carrying up to some 14,000 containers. Water-saving basins recycle part of each lockage, but the canal still depends on rainfall over its watershed, which also supplies drinking water to about half of Panama's people. Fiscal 2025 brought 13,404 transits, and fiscal 2026 ran about 5 percent higher through June.
France's attempt under Ferdinand de Lesseps collapsed in the 1880s amid disease and bankruptcy. The United States backed Panama's 1903 secession from Colombia, built the canal, and opened it in 1914, governing a Canal Zone until the 1977 Torrijos–Carter Treaties transferred the waterway to Panama on December 31, 1999. During the 2023–24 drought, daily transits were cut to as few as 22. The Panama Canal Authority plans a Río Indio reservoir, with a construction tender expected in 2027. In 2025 President Donald Trump said the United States should take back the canal, citing Chinese influence, and Panama rejected the claim, left China's Belt and Road initiative, and signed a security memorandum with Washington. In early 2026 Panama's Supreme Court annulled a Hong Kong firm's port concessions at both ends, and interim operators took over.