Panama Canal's Water Crisis Impacts Trade

Trade & Border IssuesHot Spots
Written By Jennifer Joslyn

The dry season in Panama is here, and it's causing some serious turmoil for trade through the Panama Canal. While the situation wasn't as dire as expected after a wetter November, challenges still lie ahead. January saw an increase in daily transits, with the canal forecasting 24 daily transits compared to the previously expected 20. However, fiscal year 2024 is looking at a 23% decrease in vessel throughput compared to the previous year.

The low water levels within the canal are causing the bottleneck, with projections indicating even lower levels in the coming months. This is particularly concerning as three of the largest U.S. ports rely heavily on shipments passing through the canal. Delays are becoming more pronounced, with average delays to ports like Savannah and New York now stretching to six days, significantly longer than last year.

Read more about this at Freight Waves >

WHY IS THIS IMPORTANT?

The Panama Canal is a vital highway for global trade - period. If there are any hiccups or hold-ups there, it messes up shipping schedules and causes issues for managing inventory and deliveries. Any changes in how ships move through the canal can force shipping companies to rethink their routes and schedules. Is anyone reminded of the current situation in the Red Sea?

Knowing about the hurdles the Panama Canal faces helps us check the strength of our own supply chains. We can get ahead of potential problems by diversifying our transportation routes and making sure we're ready to handle whatever comes our way.

🔥 OUR HOT TAKE?

Sure, January saw a slight uptick in daily transits, but the overall outlook for fiscal year 2024 isn't exactly rosy.

Blaming the water levels within the canal for all our troubles might be a bit of a stretch. While the dry season in Panama may be causing some hiccups for trade through the Panama Canal, let's not panic too much just yet… after all, it's not like the canal is drying up overnight.

Let's also not forget that ports on the West Coast are still trucking along just fine.

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Jennifer Joslyn
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