A recent report from Container xChange highlights the significant impact of the drought on the Panama Canal, particularly affecting dry bulk and LNG shipping segments.
The report suggests that repercussions from the drought will persist throughout 2024, says an article published on supply chain brain website.
Impact On Dry Bulk And LNG Shipping
Container xChange notes that dry bulk and LNG shipping have encountered the most substantial impact due to restricted transits. These segments operate on an ad hoc basis, deviating from fixed liner schedules. The reduction in canal water levels has led to constrained transits, affecting these non-fixed schedule segments more significantly.
Minimal Impact On Liner Shipping
Contrastingly, liner shipping has faced minimal consequences from transit reductions. The primary effect on liner shipping comes from draught reductions, where the maximum draught has been decreased from 50 feet to 44 feet. Each foot reduction results in a capacity loss of 400 TEU (Twenty-foot Equivalent Unit). Consequently, an average container vessel can now transport 2,400 TEU less.
Shifts In Shipping Routes
In response to the ongoing crisis, carriers have started redirecting shipments to the U.S. West Coast or exploring alternative routes via the Suez Canal. This shift in shipping routes could have implications for transportation costs, delivery times, and the overall supply chain efficiency of U.S. businesses.
The situation in the Panama Canal serves as a notable factor influencing global trade dynamics, particularly in segments reliant on flexible transit scheduling and draught considerations.
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Source: Supply chain brain
