Simultaneous disruption in the Panama and Suez canals, two vital corridors for global trade, is threatening global supply chains in the run-up to Christmas, Report informs via The Financial Times.
Shipowners and importers have warned that a drought in the Panama Canal and a spate of attacks on cargo vessels 11,500km away near the Suez Canal risk constraining traffic ahead of the festive season.
More than half of the container shipping by volume scheduled to link Asia and North America was set to cross either the Panama or Suez canals during the third quarter of this year, according to trade analysis group MDS Transmodal.
This October was the driest in the Panama Canal region since at least 1950, according to the canal authority, partly owing to the El Niño weather phenomenon that has affected temperatures and rainfall globally. The authorities have for the first time reduced the number of crossings, which by February will be limited to only 18 ships a day.
At least 167 ships crossed the canal during the first week of December this year, compared with 238 last year, according to trade analysis group MarineTraffic. Ships without bookings were waiting an average of 12.2 days to cross the 50-mile-long canal from the Pacific to the Atlantic, with some stranded for more than two weeks, according to the canal authority.
In an early sign of the disruption driving up the cost of goods, multiple shipowners have applied surcharges of hundreds of dollars per container for exporters sending goods through Panama, as the cost of using the canal at short notice increased by up to millions of dollars per ship passage.
Switching routes from Panama to Suez adds five days to journeys between New York and Shanghai for ships travelling at a speed of 16 knots, according to MDS Transmodal. If more shipowners avoid the Suez Canal and take the long route around Africa’s Cape of Good Hope for journeys between the same cities, this could add an additional six days to their journey.