The Panama Canal
Locks, Landslides, and the Defeat of Yellow Fever
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The book explores how the canal evolved from a French dream to an American project, covering the Culebra Cut, the lock system, and the 1999 handover to Panama. It details the tolls, efficiency, water use, and environmental effects of the canal. Chapters also discuss future projects like the third set of locks, the planned Indio River Reservoir, and alternatives such as a Nicaragua canal.
This detailed account covers everything from early proposals to modern expansion plans. It explains how the canal shaped global trade and what challenges remain. Anyone interested in engineering history or international politics will find this book informative and engaging.
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The idea of a canal across Panama dates to 1513, when Vasco Núñez de Balboa first crossed the Isthmus of Panama and wrote about the possibility of a water passage. He didn’t act on it himself. European powers soon recognized the strategic value of such a route, and the first formal proposal came in 1534. At that time, Holy Roman Emperor Charles V ordered a survey to find a way to shorten ship travel between Spain and Peru. Then, in 1668, Sir Thomas Browne, an English physician and philosopher, specifically suggested the Isthmus of Panama as the most practical location for such a canal.
The first serious effort to connect the Atlantic and Pacific Oceans through Panama began with a bold plan called the Darien scheme. It was started by the Kingdom of Scotland and carried out between 1698 and 1700. The goal was to build a trade route across the narrow land bridge, but it quickly failed due to the tough conditions in the region. The project ended without success because of the difficult environment.
In 1811, Alexander von Humboldt wrote an essay about Central America's Spanish colonies, where he looked at five possible places for a canal across the isthmus, including Panama. He thought Nicaragua, especially Lake Nicaragua, offered the best chance. His ideas shaped British plans in 1843, though that effort never got off the ground. Still, it led to the Clayton–Bulwer Treaty of 1850 between Britain and the U.S., which agreed both nations would share control over any future canal built anywhere in Central America.
In 1846, the Mallarino–Bidlack Treaty granted the United States access across Panama and permission to act militarily there if needed. Then in 1848, gold was found in California, which led to a growing need for a route through the isthmus. American businessman William Henry Aspinwall started shipping passengers and goods between New York and California by way of Panama, using an overland portage. Entrepreneurs such as Cornelius Vanderbilt soon joined in. From 1850 to 1855, a group led by Aspinwall constructed a railroad stretching from Colón on the Caribbean coast to Panama City. The project cost six times more than expected and resulted in between 6,000 and 12,000 workers losing their lives to tropical diseases. Nevertheless, the line turned out highly profitable for its owners.
In 1870, US President Grant created an Interoceanic Canal Commission to explore possible routes for a ship canal across Central America. Among its members was Brigadier General Andrew A. Humphreys, Chief of Engineers. The commission sent naval officers, including Commander Thomas Oliver Selfridge Jr., to examine the routes suggested by Alexander von Humboldt. After reviewing the options, the group chose Nicaragua as the preferred location for the canal, a decision that would shape American policy for years to come.
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Ferdinand de Lesseps, the French diplomat and entrepreneur who had already built the Suez Canal, joined forces with engineer Philippe Bunau-Varilla to push for a Panama Canal. In 1875, he was approached by a group called the “Türr Syndicate,” formed to build an interoceanic waterway through Panama. Its directors included István Türr, a Hungarian freedom fighter; Jacques de Reinach, a financier; and Lucien Bonaparte-Wyse, Türr’s brother-in-law and a lieutenant. Between 1876 and 1878, Bonaparte-Wyse and Armand Reclus explored possible routes across the isthmus. Bonaparte-Wyse traveled to Bogotá and secured a concession from the Colombian government on March 20, 1878. This agreement, known as the Wyse Concession, gave the company permission to dig the canal and operate it for 99 years.
In May 1879, de Lesseps gathered delegates from twenty-six countries at a Paris congress to discuss building a canal across Central America. Only forty-two of one hundred thirty-six attendees were engineers; the rest were investors, politicians, or de Lesseps's allies who pushed his sea-level canal plan through Panama, similar to the Suez Canal. Baron Godin de Lépinay proposed an alternative using locks and lake flooding, but was rejected. Although some delegates expressed doubts about engineering challenges and health dangers, or suggested Nicaragua instead, his plan won approval from most. Following the meeting, de Lesseps created the Compagnie Universelle du Canal Interocéanique de Panama. The company purchased the Wyse Concession from the Türr Syndicate and raised funds from French investors attracted by the Suez Canal's profits.
Work began on the Panama Canal on January 1, 1881, when excavation started at Culebra just three weeks later, on January 22. By 1888, the project had drawn a workforce of roughly 40,000 people, with about 90 percent being afro-Caribbean laborers from the West Indies. Despite attracting skilled and well-paid French engineers, the effort struggled to keep them, as disease made the conditions deadly. Between 1881 and 1889, more than 22,000 workers died, including as many as 5,000 who were French citizens.
The French effort to build the Panama Canal faced enormous challenges from the start. Though only 40 percent as long as the Suez Canal, it posed a far greater challenge due to rain forests, harsh climate, locks needed, and no old path to follow. Armand Reclus was among the first chief engineers, and others soon resigned in frustration. Workers struggled with the rainy season when the Chagres River would swell into floods rising as high as ten meters. The main cut through Culebra mountain had to be constantly widened, with slopes adjusted to avoid landslides. Venomous snakes, insects, and spiders made life dangerous, but tropical diseases like yellow fever and malaria were the worst threats, killing hundreds each month by 1884. Public health efforts failed because mosquitoes weren't known to spread disease yet. Conditions were downplayed in France to keep workers coming, but high death rates made it hard to maintain an experienced crew.
In France, de Lesseps kept the project moving even when it was clear the goals weren’t being reached, but the funding eventually dried up. The French effort collapsed in 1889 after spending around $287 million—about $10.3 billion by today’s standards. Nearly twenty-two thousand workers died from disease and accidents, and the savings of about eight hundred thousand investors were lost. Work halted on May 15, sparking a scandal known as the Panama affair. Some individuals faced prosecution, including Gustave Eiffel. De Lesseps and his son Charles were convicted of misappropriating funds and given five-year prison sentences. That ruling was later reversed, and the father, who was eighty-eight years old, was never sent to jail.
In 1894, the Compagnie Nouvelle du Canal de Panama was established to take over the stalled project. With only a small team of a few thousand workers, the company concentrated on fulfilling the requirements of the Colombian concession, operating the Panama Railroad, and preserving the existing excavation and equipment in salable condition. They put out an asking price of $109 million—roughly $4.06 billion by today’s standards—and began searching for buyers. Two lobbyists were assigned to help with negotiations. One was William Nelson Cromwell, an American lawyer who had previously represented the Panama Railroad. He grew deeply involved in advocating for U.S. support to continue the canal effort in Panama.
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In 1897–1899, President William McKinley sent two commissions, led by Admiral John Grimes Walker, to study possible routes for a canal across Central America. The first was only to consider Nicaragua, but William Nelson Cromwell pushed to include Panama. After McKinley’s assassination, Theodore Roosevelt became president and quickly moved forward. A preliminary report from the commission in November 1901 favored Nicaragua for cost reasons, though they noted Panama’s technical benefits. The price for Panama was initially quoted at $109 million, but Philippe Bunau-Varilla changed it to $40 million during a shareholders’ meeting. Engineer George S. Morison wrote Roosevelt a letter explaining why the Panama route was better technically. In January 1902, Roosevelt asked each commissioner to share their personal views. He then made his preference clear in a closed session. By late January, the commission unanimously recommended Panama.
The idea to buy the French rights to Panama sparked strong resistance in Congress, where many preferred the Nicaragua route. Senator John T. Morgan led the opposition, questioning the Walker Commission about their support for Panama. Still, the plan to pay $40 million for the French property in Panama eventually passed both houses of Congress. Senator Mark Hanna backed it, helped by President Roosevelt’s support and the work of Cromwell and Bunau-Varilla. In June 1902, the U.S. Senate approved the Spooner Act, agreeing to move forward with the Panamanian option—on condition that the proper rights could be secured.
On 22 January 1903, a treaty was signed in which the United States agreed to pay Colombia $10 million and $250,000 each year for nine years in return for a renewable lease on land needed for the canal. The deal was backed by the U.S. Senate on 14 March 1903, but it failed to gain approval in Colombia’s own senate. Critics in Bogotá had opposed the agreement, citing insufficient compensation, worries about national sovereignty, and resistance to the idea of a permanent lease.
Roosevelt shifted his approach, drawing on the Mallarino–Bidlack Treaty of 1846, and threw his support behind Panama separating from Colombia. He recognized the new Panamanian government quickly and then went on to sign a treaty with them. The terms of this agreement were similar to those in the Hay–Herrán Treaty.
On 2 November 1903, U.S. warships blocked Colombian troop movements toward Panama, where the rebellion had already begun. Panama declared independence on 3 November, and the United States recognized the new nation almost immediately. By then, Colombian forces were already on their way, but they were poorly trained conscripts, assembled during the recent "Thousand Days War" that ended in November 1902. The U.S. had been aware of Colombia’s weakness and even used this knowledge in planning the intervention. In fact, engineering teams arrived in Panama aboard the USS Wisconsin while the peace treaty was being signed. These teams began canal planning before the U.S. had even secured the rights to build it. All of this meant that Colombia could not suppress the rebellion or remove U.S. forces from what is now Panama.
On 6 November 1903, Philippe Bunau-Varilla, who was acting as Panama's envoy to the United States, agreed to the terms of the Hay–Bunau-Varilla Treaty. Through this deal, the U.S. gained control over building and running the Panama Canal Zone along with its defenses. The treaty ensured certain rights for the United States "in perpetuity," although article 22 specifically restricted other provisions to a 99-year lease. Almost immediately, many Panamanians saw the treaty as an attack on their nation’s fresh independence. This disagreement would later spark ongoing tensions among Colombia, Panama, and the United States.
President Roosevelt once said, "I took the Isthmus, started the canal and then left Congress not to debate the canal, but to debate me." His actions drew sharp criticism from parts of the American public. The New York Times called the U.S. support for Bunau-Varilla an “act of sordid conquest.” Another paper, the New York Evening Post, labeled it a “vulgar and mercenary venture.” These reactions highlighted the controversy surrounding how the United States moved forward with its plans for the canal.
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The United States formally took control of the canal property on May 4, 1904. By that time, the French had already left behind a depleted workforce and a large collection of buildings, infrastructure, and equipment—much of it in bad shape. To oversee the construction, the U.S. government created the Isthmian Canal Commission, or ICC. This commission was given control over the Panama Canal Zone, an area where the United States would exercise full sovereignty. The ICC reported directly to Secretary of War William Howard Taft. Its mission was clear: avoid the mistakes that had doomed the French effort fifteen years earlier, especially the problems of inefficiency and corruption.
On May 6, 1904, President Theodore Roosevelt named John Findley Wallace as chief engineer for the Panama Canal project. Wallace, who had led the Illinois Central Railroad, found the work overwhelming in a disease-ridden land and was forced to rely on old French equipment and infrastructure. Frustrated by the ICC’s bureaucracy, he quit in June 1905. The ICC then brought in Theodore P. Shonts as chairman and appointed John Frank Stevens as the new chief engineer. Stevens, a self-educated man who had built the Great Northern Railroad, held the role for only two years. He grew increasingly frustrated with the ICC’s red tape and began sending requests directly to Washington, bypassing the commission entirely.
One of Stevens' first tasks in Panama was overhauling the entire infrastructure to support the thousands of workers coming in. He focused on building and fixing housing, cafeterias, hotels, water systems, repair shops, and warehouses. Stevens also led efforts to recruit workers from the U.S. and elsewhere, especially those from the Caribbean, who came in large numbers and many settled permanently. He worked to ensure the workers could live and work in safety and comfort. At the same time, he re-established and expanded the railway, which became essential for moving millions of tons of dirt from the mountain cuts to the dam across the Chagres River.
Colonel William C. Gorgas was named chief sanitation officer for the Panama Canal project in 1904 by Wallace. He introduced strict measures to fight yellow fever and malaria, which were known to be spread by mosquitoes, thanks to work by Carlos Finlay, Walter Reed, and Sir Ronald Ross. Gorgas pushed for clean water systems, fumigating buildings, spraying areas with oil and larvicide, adding mosquito netting and window screens, and removing standing water. One commission member called his ideas "barmy," but Gorgas kept going, and when Dr. Thomas Francis Mead arrived, he supported the effort. After two years, the mosquito-borne diseases were nearly gone. Still, about 5,600 workers died during the U.S. construction phase—mostly West Indian laborers, especially from Barbados—with only around 350 Americans losing their lives.
Besides improving living conditions for workers, American citizens on the Canal project were given a medal after two years of service, with additional bars for every further two-year period. The medal was designed by Victor D. Brenner and featured the then-current president, and became known as The Roosevelt Medal. A total of 7,189 were issued, with some people receiving as many as four bars.
In 1905, a U.S. engineering panel reviewed the canal design, which had not yet been decided. In January 1906, the panel recommended a sea-level canal to President Roosevelt, following the French attempt from 1887 and later revisions by the Comité Technique in 1898. But when Chief Engineer Stevens was called to Washington after seeing the Chagres River flood, he declared that approach "an entirely untenable proposition." Instead, he supported a lock system raising ships to a lake 85 feet above sea level. That plan would build the world’s largest dam and lake at the time. Water for the locks would flow by gravity from Gatun Lake. The canal would connect to the Pacific through the mountains at Gaillard Cut. Stevens convinced Roosevelt this alternative was both necessary and feasible.
The American effort to build the Panama Canal began in earnest in 1904, after the French had already dug 30 million cubic yards of earth. The U.S. project would require more than 17 million additional cubic yards to be moved, mostly through the use of locks. To accomplish this massive task, the Americans replaced the outdated French machinery with new, larger-scale equipment. By 1905, they had acquired over a hundred railroad-mounted steam shovels—77 from Bucyrus-Erie and 25 from Marion Power Shovel Company. These were supplemented by giant steam-powered cranes, hydraulic rock crushers, concrete mixers, dredges, and pneumatic drills, nearly all of them designed for the scale of work ahead.
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In 1907, Dr. John Stevens resigned as chief engineer of the Panama Canal project. President Theodore Roosevelt appointed his replacement, Major George Washington Goethals of the US Army Corps of Engineers. Goethals was a West Point-trained civil engineer with experience in canals, unlike Stevens. He was soon promoted to lieutenant colonel and later to general. Under his leadership, the work in Panama moved forward and was completed in 1914, two years ahead of the target date of June 10, 1916.
Goethals split the project into three parts: Atlantic, Central, and Pacific. Major William L. Sibert led the Atlantic Division, which built the large breakwater at Bahía Limón, the Gatun locks, the 3+1⁄2-mile approach channel, and the massive Gatun Dam. Sydney B. Williamson, the only civilian member of the leadership team, headed the Pacific Division. That group was responsible for the Pacific 3-mile breakwater in Panama Bay, the approach channel leading to the locks, and the Miraflores and Pedro Miguel locks, along with their associated dams and reservoirs.
The Central Division fell under the leadership of Major David du Bose Gaillard from the United States Army Corps of Engineers. He was given charge of one of the hardest sections of the canal project: cutting through the continental divide to connect Gatun Lake with the Pacific locks. This part of the work became known as the Culebra Cut. The task was immense, requiring massive excavation across difficult terrain. Gaillard and his team faced challenges that had stumped earlier engineers. Their efforts were essential to completing the path for ships traveling between oceans. The work demanded precision, endurance, and innovation. It was a critical section of the larger engineering feat that would reshape global shipping routes.
On 10 October 1913, President Woodrow Wilson sent a telegraph signal from the White House that triggered the explosion of the Gamboa Dike, flooding the Culebra Cut and completing the Panama Canal. The first self-propelled vessel to cross from ocean to ocean was Alexandre La Valley, a floating crane built in 1887 by Lobnitz & Company, which made the journey in stages during construction and finally reached the Pacific on 7 January 1914. The first ship to make the full transit was SS Cristobal, a cargo and passenger vessel launched in 1902 as SS Tremont, which crossed the canal on 3 August 1914.
The Panama Canal was finished in 1914, exactly 401 years after Balboa's Spanish expedition first crossed the isthmus. The United States invested nearly half a billion dollars—about $16.1 billion by today’s standards—to complete the massive engineering effort. That made it the largest project of its kind the U.S. had ever undertaken. On August 15th, 1914, the canal officially opened with the transit of the cargo ship SS Ancon.
The Panama Canal opened in 1914, but just a year later, in 1915, a landslide closed the Culebra Cut for nearly seven months. That disruption changed global shipping routes and hurt ports in Chile. The shift also damaged the sheep farming economy in southern Patagonia and impacted the Falkland Islands’ economy too.
Ernest "Red" Hallen served the Isthmian Canal Commission during this period, tasked with recording the advancement of the canal's construction. Throughout those years, his role was to document the work as it unfolded. His contributions offered a visual and written account of the progress being made. The commission relied on his efforts to capture the details of the engineering challenges and achievements. This documentation helped preserve the story of the canal’s development for future understanding. Hallen’s work provided a record of the labor and innovation involved in building the Isthmian Canal. His presence ensured that the process was carefully observed and recorded. The Isthmian Canal Commission valued his commitment to documenting the project's evolution.
In 1914, steam shovels that had been used on the Panama Canal were purchased and put to work at the Chuquicamata copper mine in northern Chile. These machines, which had helped dig through the dense terrain of Panama, found a new purpose in the mining industry. The move marked a transition in their use, shifting from the ambitious engineering project of the canal to supporting the extraction of copper in South America. This reuse of heavy machinery showed how the technology developed for one major undertaking could benefit another, far-flung endeavor. The equipment carried with it the legacy of its time in Panama, now serving a different kind of excavation.
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The Panama Canal opened on August 15, 1914. Soon after, the Panama-Pacific International Exposition was held in San Francisco. At noon, President Wilson activated a gold telegraph key in Washington D.C., transmitting a signal three thousand miles to the Tower of Jewels. The exhibition palaces' doors swung open, water flowed from the Fountain of Energy, and cannons roared as crowds cheered. By the 1930s, the canal faced water shortages, leading to the construction of the Madden Dam on the Chagres River above Gatun Lake. Finished in 1935, it formed Madden Lake, later named Lake Alajuela, which helped store more water. In 1939, work began on a new set of locks meant to handle larger warships the U.S. was building. Excavation continued for years, but the project ended after World War II.
After World War II, the United States' control over the Panama Canal and the surrounding Canal Zone grew increasingly controversial. Relations between Panama and the U.S. became more strained as Panamanians argued the Zone should belong to their country. Student protests were met with fencing off the area and a stronger military presence. Tensions rose after the Suez Crisis in 1956, when the U.S. pressured France and the UK to give up their attempt to retake the Suez Canal, which had been nationalized by Egypt’s Nasser regime. Panamanian unrest peaked on Martyr’s Day, January 9, 1964, when about twenty Panamanians and three to five U.S. soldiers were killed in riots.
In 1974, talks started that would lead to the Torrijos–Carter Treaties. Seven September 1977 marked the signing of that agreement, with Jimmy Carter, who was president of the United States at the time, and Omar Torrijos, who led Panama in reality, putting their names to it. The treaty paved the way for Panama to take charge of the canal, provided the country promised the waterway would stay neutral forever. On 31 December 1999, at noon, the transfer was complete, and the Panama Canal Authority (ACP) took over. That canal continues to be a major source of income for Panama.
Before the handover, the government of Panama put out an international bid to negotiate a 25-year contract for operating the container shipping ports at the canal’s Atlantic and Pacific ends. This contract was not connected to the ACP or the Panama Canal operations themselves. It was awarded to Hutchison Whampoa, a Hong Kong-based shipping company owned by Li Ka-shing.
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On 21 December 2024, then US President-elect Donald Trump said the United States should take back control of the Panama Canal from Panama, calling the fees American ships paid "exorbitant" and claiming they violated the Torrijos–Carter Treaties. The next day, he added that the canal was "falling into the wrong hands", referring to China. Panamanian president José Raúl Mulino responded quickly, denying that the US was being overcharged and insisting that only Panama fully controlled the canal, calling it part of the country's "inalienable patrimony".
The Panama Canal Authority runs the locks and Marine Traffic Control independently, not the Hong Kong company Hutchison Port Holdings, which only operates two ports near the canal’s ends—Balboa on the Pacific side and Cristóbal on the Atlantic. These ports are not controlled by Hutchison or the government of Panama, though the Panamanian government does receive dividends from the concession. Three other ports in the area are operated by companies from Taiwan and Singapore, as well as a joint venture between the United States and Panama. Harbor pilots who guide ships through the canal are Panamanian.
On December 24, protesters gathered at the U.S. Embassy in Panama City to oppose President Trump's threat to reclaim control of the Panama Canal. They called him a "public enemy" of Panama. Also on that day, the Bolivarian Alliance for the Peoples of Our America, known as ALBA, which includes ten Central and South American nations, spoke out against Trump’s comments. The group affirmed its support for Panama’s sovereignty, territorial integrity, and self-determination.
In a press conference on 7 January 2025, Trump said he would take control of the Panama Canal. He did not rule out using economic or military action against Panama to secure what he called U.S. "economic security." He repeated his promise to reclaim control of the canal in his inaugural address on 20 January.
On February 5, the U.S. State Department announced on Twitter that American government ships would no longer be charged to pass through the Panama Canal. Panamanian President Mulino dismissed the statement as "intolerable," and shortly after, Secretary of State Marco Rubio had to step in and correct the record. He clarified that he "expects" Panama to begin charging fees again, as part of an agreement tied to the Torrijos–Carter Treaties, which ensure U.S. military support in case of an attack on the canal.
On March 5, 2025, BlackRock announced it would buy an 80% stake in Hutchison Port Holdings from CK Hutchison, a deal that included ports on both sides of the Panama Canal. According to The New York Times, the Li family, who own the Hong Kong-based company, felt political pressure to exit the ports business. Talks with BlackRock had only begun a few weeks earlier, around the time the Trump administration took office.
In early 2026, Panama’s High Court determined that the concessions granted to Hong Kong's CK Hutchison Holdings were unconstitutional, leading to the cancellation of their contract. The government assured that the Canal’s operations would continue unaffected. Around that time, President Mulino announced the end of the crisis with the United States, saying, “Panama moved toward a relationship of respect, restored trust, joint work, and friendship, and the canal remained Panamanian.” On 23 February, the Panama Maritime Authority assumed control of Balboa and Cristobal ports. After the Iran war, Canal traffic rose as much as ten percent because of the Middle East crisis, with liquefied natural gas carriers becoming a major part of the increased shipments from the U.S. to Asia.
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For its first century, the Panama Canal restricted the size of ships passing through it using the Pedro Miguel Locks, a minimum depth of 12.6 meters, and the height of the Bridge of the Americas at Balboa. Vessels built to meet these limits are known as Panamax ships. A typical Panamax cargo ship has a deadweight tonnage between 65,000 and 80,000 tons, but due to draft restrictions within the canal, it can carry only about 52,500 tons of cargo. The largest ship to ever transit the canal was the San Juan Prospector, which is now called the Marcona Prospector. It measured 296.57 meters in length and 32.31 meters in beam.
The locks at Gatun were originally planned to be 28.5 meters wide, but in 1908 the United States Navy asked for them to be widened to at least 36 meters to accommodate large warships. A compromise was reached, and the locks ended up being 33.53 meters wide. Each lock is 320 meters long, with walls that are 15 meters thick at the base and taper to just 3 meters at the top. The central wall separating the parallel locks is 18 meters thick and over 24 meters high. The steel gates themselves average 2 meters in thickness, 19.5 meters in width, and 20 meters in height.
When the USS Saratoga traveled through the Gatun Locks in 1928, she was so wide that her flight deck stuck out past the ship’s hull on both sides. The canal pilots weren’t ready for a vessel of that size, and as she moved through, the massive ship knocked over every concrete lamp post along the way.
In 2016, after a decade of work, the Panama Canal finally finished an expansion project that added larger locks. These new locks let ships pass through deeper and wider channels. The size limits for vessels using the new locks went up by twenty-five percent in length, fifty-one percent in beam, and twenty-six percent in draft, all according to Neopanamax standards.
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As with a toll road, ships going through the Panama Canal have to pay fees called tolls. These tolls are set by the Panama Canal Authority and depend on the type of ship, its size, and what it's carrying. For container ships, the fee is based on how many standard shipping containers, called TEUs, the ship can hold. Starting April 1, 2016, the cost was adjusted to $60 per TEU plus $30 for each loaded container, which could add up to $90 per TEU when full. A Panamax ship can carry as many as 4,400 TEUs. There’s also a different rate for passenger ships and for container ships traveling without cargo, known as “in ballast.” As of that same date, the ballast toll dropped to $60 per TEU, down from $65.60.
Passenger ships over 30,000 tons pay based on how many permanent beds they have, with rates of $111 for empty berths and $138 for occupied ones, starting April 1, 2016. That change, beginning in 2007, raised tolls significantly for those ships. Smaller passenger vessels are charged like freighters, based on tonnage. Most major cruise ships carry more than 33 tons per passenger; the typical comfort standard is around 40 tons. Other ships pay a fee per PC/UMS net ton, where one ton equals 100 cubic feet. In fiscal year 2016, the toll was $5.25 for the first 10,000 tons, then $5.14 and $5.06 for additional tons. Ballast ships get reduced rates of $4.19, $4.12, and $4.05 respectively.
In April 2016, a new toll system went into effect, with higher rates for the neopanamax locks and a separate category for natural gas transport. By October 2017, further changes were made to how tolls were calculated. Vessels under 125 feet long were charged minimum tolls based on their length, according to a table from April 2015. The first toll paid to the U.S. government for canal use by a pleasure boat was collected from Morgan Adams of Los Angeles. His boat, Lasata, passed through the Panama Canal Zone on August 14, 1914, during a 10,000-kilometer journey from Jacksonville, Florida, to Los Angeles.
The most expensive regular toll for canal passage was paid in April 2010 by the cruise ship Norwegian Pearl, which handed over $375,600. The average toll comes to about $54,000. In August 2006, the Panamax tanker Erikoussa paid $220,300 through the Transit Slot Auction System to get priority passage, skipping a queue of ninety ships waiting for maintenance on the Gatun Locks and avoiding a seven-day delay. That fee was far above the normal cost of $13,430. Then in August 2026, South Korean company SK Gas paid a record $5.3 million in an auction for priority transit through the Panama Canal for the LPG tanker G. Spirit, scheduled to pass on September 1, 2026, driven by rising demand and drought conditions linked to El Niño.
In 1928, American Richard Halliburton made a remarkable swim through the Panama Canal, and the toll he paid was just 36 cents—about $6.75 in today’s money. That’s the lowest toll ever recorded for passing through the canal. His swim was not just a feat of endurance but also a bold statement about the waterways he traversed. The cost of travel, even by swimming, was minimal compared to what others paid, and it marked a unique moment in the history of the canal's use. Halliburton’s journey remains one of the more unusual ways anyone has ever crossed this engineering marvel.
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Opponents of the 1977 Torrijos–Carter Treaties worried that efficiency and maintenance would decline after the U.S. left the Panama Canal Zone, but that hasn’t happened. In 2004, it was reported that operations were improving under Panamanian control, building on practices from the American era. Canal Waters Time, or CWT — the average vessel transit time including wait periods — ranged between twenty and thirty hours in the first decade of the 2000s, according to the ACP. The accident rate has also stayed steady, with between ten and thirty formal investigations each year out of about fourteen thousand transits.
The Panama Canal has experienced growing traffic, particularly as shipments from Asia began traveling through it to the U.S. East Coast instead of the West Coast. In 2007, the number of ocean-going transits reached 13,233, up from 11,725 in 2003, though they dropped to 12,855 in 2009. The average size of ships increased along with the number of Panamax vessels passing through. During fiscal year 1999, the canal carried 227.9 million PC/UMS tons, reaching a record high of 312.9 million tons in 2007 before falling to 299.1 million tons in 2009. By 2015, it was moving 340.8 million PC/UMS tons across 13,874 transits.
After taking control of the canal, the Panama Canal Authority began a major modernization effort in the first ten years, investing almost one billion dollars to boost capacity by 20 percent. The ACP focused on several key changes, like expanding and straightening the Culebra Cut to make it easier for ships to pass through, deepening the waterway in Gatun Lake to lower draft limits and improve water flow, and also deepening the entrances on both the Atlantic and Pacific sides of the canal.
The canal's operations got a boost from new equipment like a drill barge and suction dredger, plus a 20 percent increase in the tug boat fleet. They upgraded the machinery too, adding more and better tug locomotives, replacing over ten miles of track, and installing new lock controls. They also improved how ships move through the waterway, making traffic management more efficient.
In December 2010, heavy rains caused the Panama Canal to shut down for seventeen hours. It was the first time since the U.S. invasion of Panama in 1989 that the canal had closed. The same storm also led to part of an access road for the Centenario Bridge collapsing.
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The Panama Canal is facing growing competition, especially as ship sizes have increased and tolls have gone up. Some people now point to the Suez Canal as a possible replacement for shipping cargo between Asia and the US East Coast. Still, the Panama Canal remains busy, serving over 144 global trade routes. Most of its traffic comes from the "all-water route" that travels from Asia to the US East and Gulf Coasts.
In 2013, Nicaragua awarded a Hong Kong-based group called the HKND Group a 50-year concession to build a canal through the country. By February 2018, many analysts believed the project had failed, though the head of the project claimed work was still going on. Then in April 2018, the HKND Group shut down its offices, leaving no contact information for anyone trying to reach them.
The growing melt of ice in the Arctic Ocean has sparked talk that the Northwest Passage or Arctic Bridge might work for shipping between Asia and Europe. This route could save about 9,300 kilometers compared to using the Panama Canal. Some traffic may shift to this new path, though it faces big challenges. There are still unresolved territorial disputes, and ice remains a serious problem even if the route becomes usable.
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The Panama Canal has played a key role in global trade since it opened in 1914. It connects the Atlantic and Pacific Oceans, cutting down on travel time and costs for ships moving between these waters. This shortcut has helped boost international commerce and economic growth. Over the decades, the canal has changed through new expansions and updates to its policies. These changes have kept it important in the worldwide system of maritime transport. It remains a core part of how goods move across the globe today.
The Panama Canal’s expansion, finished in 2016, let much larger Neopanamax ships pass through, nearly tripling its past capacity. This change deeply affected global trade routes, especially for container ships, liquefied natural gas carriers, and bulk goods. By taking in bigger vessels, the canal cut transportation costs for big exporters like the United States, China, and Japan. It also shifted trade patterns by making East Coast ports in the U.S. more attractive, leading to increased traffic there.
The Panama Canal is vital to global trade, with more than five percent of all goods moving through it each year. It handles important items like grain, oil, and manufactured products, especially connecting Asia and the Americas. The canal also boosts Panama’s economy. The Panama Canal Authority collects tolls that help fund the country’s growth, including ports and free trade zones. After the canal passed from U.S. control to Panama in 1999, those funds were used for national projects. The expansion added even more jobs and attracted investment to the region.
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Gatun Lake fills up with rainwater, especially during wet months when there's more water than needed. The old locks let water go back to the ocean each time a ship moves through them, and this loss is huge—about 101,000 cubic meters per lock movement. That’s nearly 27 million gallons or 81.9 acre-feet of water going down each time. The amount of water lost doesn’t depend on how big the ship is or how much of it is underwater. It's just the fixed volume that moves with each step of the process.
The ACP, which is part of the World Business Council for Sustainable Development and a signatory to the 2000 United Nations Global Compact, created a program for the canal’s expansion that aims to protect both land and water in the watershed. This plan includes three water-saving basins at each new lock, reducing overall water use. In addition, the project preserves freshwater by reusing about 60 percent of the water from each basin during every transit.
The water levels on either side of the canal differ slightly, with the Pacific side sitting about twenty centimeters higher than the Atlantic. This small but significant difference comes from natural variations in ocean conditions—like how dense the water is and the local weather patterns. These changes in sea level affect how the locks operate and must be carefully managed throughout the system.
The Panama Canal has faced serious water issues in recent years, especially during the 2015–2016 fiscal year, when it experienced one of its driest periods on record, which limited ship passage. Rising temperatures have increased evaporation, worsening the problem. Normally, the canal allows 36 ships to pass each day, but by early December 2023, that number dropped to just 22 due to low water levels. By January 2024, the daily limit had risen slightly to 24 ships. In 2025, canal authorities began planning a new dam to help raise water levels in Lake Gatun, the main freshwater source for the canal’s operations.
In 2026, the Panama Canal Authority had to cut back on how many ships could pass through the waterway because of less rain and the growing effects of an El Niño event. Starting September 3, 2026, the number of ships allowed per day went down from 36 to 34. Then, on September 15, 2026, that number dropped again, to 32 ships per day.
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In June 2017, an enlargement project officially opened, expanding the canal to meet changing shipping needs. By 2011, 37 percent of global container ships were too large for the original locks. The canal’s maximum sustainable capacity was estimated at 340 million PC/UMS tons per year, and by 2012 it would have been reached, as nearly half the vessels used the full width of the locks. After years of review, Panama's government canal authority recommended a plan similar to the Third Lock Scheme of 1939. The expansion, costing $5.25 billion, was approved in a national referendum on October 22, 2006, with about 80% support. It doubled the canal’s shipping capacity and allowed larger Post-Panamax ships to pass through.
The Panama Canal expansion began in 2007 with thousands of Panamanians watching the massive explosion marking the project's start. Engineers first tackled dry excavation of a 218-meter trench connecting the Gaillard Cut to the Pacific coast, removing 47 million cubic meters of material. In July 2009, Belgian dredging company Jan De Nul was chosen along with Spanish, Italian, and Panamanian contractors to build six new locks for $3.1 billion. The design mirrored the Berendrecht Lock in Belgium, which is 68 meters wide and 500 meters long, making it the world's second-largest. By June 2012, a 30-meter concrete monolith was completed—the first of 46 lining the new Pacific-side lock walls. But by early July 2012, the project was already six months behind schedule, pushing the opening from October 2014 to April 2015. By September 2014, officials said the new gates would open in early 2016.
In January 2014, a contract dispute slowed the project, but by June 2014, the consortium members had met their goals and gotten back on track. Then, in June 2015, flooding began in the new locks—first on the Atlantic side, then the Pacific. By that time, the canal’s re-inauguration was scheduled for April 2016. On March 23, 2016, the expansion inauguration was set for June 26, 2016.
The Panama Canal expansion was completed in 2016, adding a third set of locks that increased the canal’s annual capacity to about 600 million PC/UMS tons. The new locks opened to commercial traffic on June 26, 2016, with the Chinese-owned container ship Cosco Shipping Panama being the first Neopanamax vessel to transit through them. A formal opening took place in 2017. The original locks, now over a century old, are still in use and will likely continue operating for years to come. The largest ship to pass through the expanded canal had dimensions of 366.47 meters long, 48.23 meters wide, and a draft of 15 meters. The total cost remains unknown, though contractors are seeking at least $3.4 billion more from the canal authority due to extra expenses.
The third set of locks expansion added two new flights—east of existing Gatun locks and southwest of Miraflores—each with its own approach channel. These new flights rise directly from sea level to Gatun Lake's level, bypassing the older two-stage system. Each lock chamber measures 427 meters long, 55 wide, and 18.3 deep, enabling ships up to 366 meters in length and 15 meters in draft—roughly 12,000 TEUs—to pass through. The design features sliding gates, doubled for safety, and is supported by new channels, including a 6.2-kilometer route from Miraflores to the Gaillard Cut. The Gaillard Cut and Gatun Lake channels were widened to accommodate larger vessels, while the maximum level of Gatun Lake was raised slightly. Each lock chamber includes nine water reuse basins that recycle 60 percent of the transit water, reducing overall usage by 7 percent per transit.
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Since its construction and later expansion, one of the most critical trade routes in the world has brought along a host of environmental issues. The area has experienced widespread deforestation, and invasive species have begun to spread. Water and air pollution have increased, while shortages of water have also emerged.
Deforestation in the Panama Canal drainage basin has been a serious issue for years. In 1978, researchers warned that "clearing the forest in the [drainage basin] might kill the canal." By 1985, forested land had fallen to just 30%. As of 2000, the problem continued, driven by population growth, land degradation, and erosion. These conditions harmed the ecosystem, especially the Gatún and Alajuela Lakes, which are key to both canal operations and local water supply. Deforestation leads to erosion, raising the lake bottoms and reducing their ability to hold water.
When the Panama Canal was expanded in 2016 with the addition of a third set of locks, global trade increased along with the movement of invasive species. Ships carrying these organisms from ocean to ocean have allowed them to spread in ways they never could have naturally. One such example is the Asian green mussel, which was first spotted in Caribbean waters in the late 1990s and later moved through the canal. These non-native species can damage local environments and outcompete native wildlife.
Ships moving through the Panama Canal frequently dump pollutants into the water. In 1986, an oil spill east of the Caribbean entrance killed plants and invertebrates nearby. The shipping industry also sends greenhouse gases such as carbon dioxide and methane into the air. Since the canal is a busy chokepoint, heavy traffic and delays force vessels to burn extra fuel. This leads to more pollution that worsens environmental issues and accelerates climate change.
The Panama Canal draws heavily on fresh water from Gatún Lake, which serves as Panama City’s main supply of drinking water. Every time a ship travels through the canal, roughly 200 million liters—or about 52 million gallons—of freshwater are used. This massive water consumption has caused serious environmental and social problems. In 2019, during a drought, the water levels in Gatún Lake fell to historic lows, largely due to the amount of water being pulled for canal operations.
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In response to serious droughts that hurt the Panama Canal’s work in 2023 and 2024, the Panama Canal Authority announced plans for a new reservoir on the Indio River. This project would cover 4600 hectares and cost $1.6 billion. The dam would hold about 1.25 billion cubic meters of water, enough to support up to 15 extra daily ship transits during dry times. It would also supply drinking water for more than half of Panama’s people. This plan came after a 2023 Supreme Court ruling redefined the legal limits of the canal’s watershed, allowing such water projects to go beyond earlier boundaries.
The planned Indio River Reservoir project has sparked social and environmental worries, as it would move around 2,000 people and flood local villages. By 2024, the ACP had started talking with residents to figure out ways to reduce harm and pay for losses. As of March 2026, families affected by the project were set to be relocated starting in 2027. Construction was expected to begin in 2028 and finish by 2031.
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In 2014, Wang Jing, who led the HK Nicaragua Canal Development Investment Co. Ltd., known as the HKND Group, said the route for the proposed canal in Nicaragua had been approved. The company planned to start building the project that year, with an estimated timeline of five years. But by the time the Nicaraguan parliament passed approval for the 280-kilometer waterway, little progress had occurred before the effort was dropped. Under the deal, the firm would have operated and maintained the canal for half a century. By May 2017, no actual construction had taken place, and concerns grew over how it would be funded. By 2018, the project was considered dead.
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In 2011, Colombia’s president Juan Manuel Santos introduced a plan for a 220-kilometer railway connecting the Pacific and Caribbean coasts. The proposal aimed to link these two regions through major infrastructure development. By that time, however, the idea had already lost momentum. A representative from the Colombia-China Chamber of Commerce noted in 2015 that the project “was mentioned in 2011 and subsequently had minimal relevance.”
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The Interoceanic Corridor of the Isthmus of Tehuantepec, or CIIT, is a railway system known as the Tren Interoceánico, built to move cargo and passengers between the Pacific and Atlantic oceans. Work began in 2019, with passenger services launched in December 2023 and full operations completed by July 2024. The route offers advantages such as speed—around six hours to cross—and its proximity to the United States compared to Panama. Plans also include ten industrial parks designed to attract private investment through tax incentives. Yet, according to Rafael Marín Mollinedo, the former director of the CIIT, and Alfredo Oranges, Panama’s ambassador in Mexico, the project should not be seen as a rival to the Panama Canal, but rather as a “complement,” with Panama suggesting cooperation to enhance the Corridor’s efficiency.
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For over a century, the Panama Canal Authority has honored select individuals with membership in the "Esteemed Order of Bearers of the Master Key of the Panama Canal," as well as the title of Honorary Pilot. One recent recipient was US Federal Maritime Commissioner Louis Sola, recognized for his support of seafarers during the COVID-19 pandemic and for transiting the canal more than 100 times. On April 25, 2006, Senior Captain Raffaele Minotauro, an Italian shipmaster from the former Italian Line, was awarded the title of Panama Canal Honorary Pilot. In 2014, Commodore Ronald Warwick, a British citizen and former master of the Queen Elizabeth 2 and RMS Queen Mary 2, also received this honor after navigating the canal more than fifty times.
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