British consumers are facing shortages and price rises for fruit, vegetables and other fresh produce into the New Year due to the worsening drought on the Panama Canal.
Vital Trade Route
Falling water levels on the vital trade route between the Pacific and Atlantic oceans have led to a drastic reduction in the number of vessels able to pass through the canal, with dozens of ships forced to queue for weeks to secure a passage. The delays, which will lead to the number of daily transits falling to half the normal pre-drought levels by February, have already led to warnings that Christmas goods from iPhones to exercise bikes and tree lights are set to fail to reach retailers in time for the festive season. But import and retail experts are now warning of problems with supplies of perishable goods for supermarkets and other food stores as Britain and other European countries turn to South and Central America to maintain supplies of fresh produce – from asparagus to mangoes – during the winter months. Analysts have warned that countries such as Peru face difficulties in maintaining supplies if ships carrying refrigerated containers of fruit, vegetables and other goods such as coffee and meat are subjected to excessive delays or diverted via longer shipping routes.
The industry group representing UK importers and exporters have warned that a worse squeeze on goods from Central and South America is set to follow in the New Year. Britain relies on the main harvest season in Latin American countries such as Ecuador, Chile and Peru from November to March to maintain supplies of fresh produce during periods of decreased winter production from locations such as Spain. But delays on the traditional route via the Panama Canal could lead to shortages and increased prices for consumers if importers and retailers choose to pass on increased costs such as extended shipping times or even the payment of hefty premiums to jump shipping queues at the vital choke point between the Pacific and Atlantic.
Supply Chain Affected
The 50-mile long canal, which opened in 1914, allows shipping to avoid an 8,000-mile detour when transiting from one side of the Americas to the other. It is a short-cut for which some users are now willing to pay an eyewater premium, with at least one shipping company reportedly agreeing last month to pay nearly $4m (£3.2m) to move to the head of the queue. Marco Forgione, director general of the Institute of Export & International Trade, which represents some of Britain’s largest importers and exporters, said: “During the vital months of November to March, much of South American shipping is focused on exports of fruit and vegetables, generally via refrigerated containers. For Peru, Chile and Ecuador, much of that produce will be routed via the Panama Canal.
“What is a major concern is post-Christmas if these issues continue, not only could the export of fruits and vegetables be impacted, but we could see extended transit times and squeezing up costs even more for UK importers.” With shipments of grain crops between the United States and Asia already facing delays of up to three weeks, shipping and freight forwarding companies have said the reduction in capacity on the canal is already affecting international supply chains. Experts said producers and retailers are consequently facing another “supply-chain crunch” as they scramble to find ways of ensuring goods reach shelves in time for Christmas and beyond.
Suki Basi, managing director of Russell Group, said: “The current crisis in Panama could not come at a worse time for the UK. With the economy suffering from a lack of consumer confidence due to the cost-of-living crisis, another supply chain crunch will do little to boost that confidence…” Mr Forgione warned that increased transit times, which could add up to a fortnight to a journey between the Americas and Europe, could result in shipments of fresh produce arriving in an unsellable condition. He said: “The commercial impact on businesses will also be significant if fresh produce is spoiled and wasted, delivery deadlines are missed, and cargo is stuck in ports … Situations like this highlight the vulnerabilities in our UK supply chains and the need for solid strategies to be in place in order to minimize the impact of future disruptions.” According to the Panama Canal Authority, which operates the waterway, the El Nino weather pattern has contributed to the worst drought in the region in 70 years, with October ranking as the driest month since records began in 1950.
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Source: NewsUk
