Ilya Espino de Marotta takes over Monday as head of the Panama Canal Authority at a critical time in the waterway's history.

The 50-mile marine shortcut between the Pacific and Atlantic oceans that carries 40% of U.S. containerized trade is struggling to meet shipping demand because of persistent low water levels caused by little rainfall. The canal is also at the center of a geopolitical struggle between the U.S. and China over control of global trade routes.

Espino de Marotta is familiar with the canal's environmental and geopolitical challenges. A marine engineer by training, she started working at the canal in 1985 when it was controlled by the United States. She witnessed its handover to Panama in 1999 and rose through the authority's ranks, eventually overseeing a massive project to widen the waterway to accommodate larger ships.

Espino de Marotta talked with the WSJ Logistics Report about the canal authority's plans to deal with the El Niño weather pattern, expected to be the strongest in decades, and about the recent record $5.3 million paid by a tanker for priority passage through the canal. Edited excerpts follow:

WSJ: How has the canal changed over the four decades you have worked there?

Espino de Marotta: Under the U.S. government it was a break-even operation. When control switched to Panama, the main change was to be a revenue provider for the country. We also realized that with vessels getting larger, if we didn't do something we would lose relevance in world commerce. So we started in 2002 analyzing the Panama Canal expansion program, which was completed in 2016.

Today, income from the new locks is more than 50% of the income of the Panama Canal. Even though we have not increased the number of transits, we have increased the cargo carrying capacity of the vessels, and that's what brings the revenue. This year, we are expecting to pay a record $3.6 billion to the state.

WSJ: Have you seen a change in shipping demand because of the war in Iran?

Espino de Marotta: We've seen an increase in traffic. We normally serve 35 to 36 vessels per day. For a couple of months during the Hormuz crisis, we saw 39 to 41 vessels per day. That's come down a bit because we're starting to impose draft restrictions, which reduce the amount of cargo ships can carry. We're saving water to make sure that in the dry season, which starts in a few months, we have enough water. We also told the shipping industry that we were dropping from 36 transits per day to 34 on September 4th and then to 32 on September 15th.

WSJ: Who decides how the water should be managed?

Espino de Marotta: We own and regulate the Panama Canal lakes that provide water for shipping as well as drinking water for 50% of the country. We reduce daily transits so we don't have to tell the population, "There's not enough water for you guys." We try to find operational ways to save water to have less of an impact on the shipping industry and to supply drinking water for the population.

WSJ: What other steps are you taking to mitigate water shortfalls?

Espino de Marotta: We are developing a new lake, the Río Indio project. It will be able to accumulate enough water to provide 10 to 15 additional transits per day or about the same volume consumed by drinking water. This project should be ready in 2031 or 2032.

WSJ: A ship recently paid a record $5.3 million to transit the canal. Do you think auction prices could go even higher?

Espino de Marotta: We have 10 daily transits through the canal's biggest locks. Nine are made using a reservation system and the tenth is offered via auction. The auction starts at $100,000. So really, it's the market that dictates how much they pay. Now that we are starting to reduce the number of transits to nine per day, that auction slot becomes more desirable. I don't want to speculate about future auction prices, but I don't expect it to be much higher.

WSJ: The U.S. and China have been arguing about control of ports on each side of the canal.

Espino de Marotta: Those ports are managed by the Panama Maritime Authority, not by us.

WSJ: But the Panama Canal Authority has opened a bid process for two new ports you want to develop. Why?

Espino de Marotta: It's a good business and it will help diversify the canal revenues. We are almost at maximum capacity and we want to make sure that we continue being an important transshipment hub in the region. Those new ports should be up and running by 2030 or 2031. We're also thinking about an energy pipeline so that we can move more cargo across Panama without using the locks.