No ceasefire for a drought: The chokepoint that failed while the world watched Hormuz

One waterway shut down by a war. Another shutting down because of the weather. How we should prepare for concurrent events.

The Strait of Hormuz closed because of a conflict. Two governments, missiles, a war you can name and, in theory, end at a negotiating table. That is the loud crisis, and we have covered it. But while everyone watched Hormuz, a second one of the world’s most important waterways started failing for an entirely different reason. The Panama Canal is running low on rain. There is no negotiating table for that. You cannot broker a ceasefire with a drought.

That is the whole story in one line. One chokepoint went down to a conflict. The other is going down to the climate. And most continuity plans are built for neither.

In our last fortnightly update we made the point that the airlines have become a live resilience lesson, that the real problem is no longer whether the airspace is technically open; it is that too much traffic is chasing too few viable routes. The canal is that exact lesson, on water. And it comes with a trap the airlines did not have. The canal looks like it has recovered. It did not, not in the way that matters to you.

Open, but empty

Start with the figure few are quoting. Through the 2023-24 drought, LNG carrier traffic through the canal’s newer locks fell roughly 73 percent. Before the drought, around 26 LNG carriers went through every month. By the first half of 2025 it was about four.

The lake is full again. Full-draft operations are back. But the LNG carriers are not. They rerouted around the Cape of Good Hope, built that longer route into their contracts, and stayed there because it was cheap enough to keep.

So, the canal is open, and revenue is up, and one of its highest-value cargo types has quietly left and is not coming back. That is not a footnote. If anything in your supply chain touches LNG, or moves between Asia and the Americas, the assumption that it flows through Panama the way it did in 2022 is simply wrong now, and no headline about water levels makes it right again.

Shock versus stress

The drought was presented as a shock and behaved as stress. Water down, ships capped, revenue lost, then water back and revenue up, the clean bounce-back arc of a shock.

But underneath it the route reorganized for good, and the visible recovery masked the structural one. Stress has no recovery point on the dashboard because there was never a clean break to recover.

Here is why it lands on your desk and not Panama’s. A stress does not hurt whoever caused it or whoever sits nearest to it. It hurts whoever kept planning as though nothing changed. If your program is still keyed to the shock, water’s back, canal’s open, all clear, then you are the one holding a risk that has already moved.

The one question your plan gets wrong

You could run the BIA loop in your sleep. The step that quietly fails is the first one, and specifically where the boundary of “the organisation” gets drawn. This is the part that everyone moves through fastest and should sit with longest.

Most BIAs draw it at the tier-one supplier. Is the supplier up? Few ask whether the route that supplier depends on is the same route it depended on eighteen months ago. A plan that checks whether the canal is open, instead of whether your specific cargo returned to it, is measuring the shock and blind to the stress. That is the gap between a recovery time that is real and one that expired in 2022 without anyone reopening it.

And it is not only the canal. Somewhere in your chain is a single node every one of your suppliers leans on without declaring it, a port, a strait, a shared energy source. No one owns the job of testing it because individually everyone assumes it holds.

This is the conversation the risk appetite statement exists for, and the one artefact almost nobody revisits. It is built to account for sudden shocks. It rarely accounts for the slow erosion of something everyone assumed was permanent.

The fix runs on a slower clock than the risk

Panama’s answer is the Río Indio reservoir, a roughly $1.6 billion project with tenders not expected until 2027 and completion in the early 2030s at the earliest.

Leave aside the execution risk. The real problem is timing. El Niño has already formed and is expected to strengthen, and the worst water impacts usually arrive the year after onset. This points to the next real squeeze being 2027. The fix is years behind the risk. A plan that waits for the reservoir is planning something that will not exist when the next stress hits.

What resilience looks like

While everyone argued about how to fix the canal. Hyundai Glovis moved roughly 900 vehicles from Asia to the US East Coast overland, by rail across Mexico's Isthmus of Tehuantepec. Not a ship. A train. Not a fix for the canal, a way to stop needing it.

That is the whole distinction. Making the canal stronger is one thing. Not depending on it is another, and it is the one that survives the next drought. But you can only build a way around a chokepoint your plan actually wrote down as a chokepoint. If it is not in the plan, there is nothing to build around.

A message your board will not want to hear

When the dashboard goes green, the pressure to declare it over is enormous. The canal is open. Revenue is up. The surcharges have eased. Telling the board the crisis is resolved on the strength of those numbers is not lying. It is reading the shock and missing the stress. And it means walking the message back the next time that stress surfaces as a fresh shock.

The harder line, and the accurate one, is that the event is over but the exposure is not. That is a difficult thing to say to a board that wants closure. It is exactly what the situation requires.

What to do

The fortnightly update already gave the action list. Book slots forward, audit your LNG exposure, stress-test the compound scenario, stop treating war risk and climate risk as separate lines when they now land together.

This piece adds one thing underneath all of it. Reopen your business impact analysis. Not to change a number, but to redraw the line around what counts as your business. Ask whether it is built on where your cargo used to move, or where it actually moves now. The canal has run on rain since 1914. That will not change. What can change, before 2027 rather than after it, is whether you are still quietly betting the shortcut will always be there.