Restrictions on crossings through the Panama Canal could disrupt the restocking of inventory across a range of products headed to the United States and Europe, just as wholesale inventories dwindle and the Christmas shopping season approaches.
The result could be missed sales opportunities for retailers, according to Container xChange, an online platform for container logistics.
The Panama Canal Authority (ACP) is implementing water conservation measures in response to a drought by limiting the amount of traffic that can flow through the vital shipping canal.
Vessels face prolonged wait times and capacity limitations, causing ripple effects across the shipping sector.
Ships have waited as long as three weeks to cross the waterway because the ACP has restricted crossings to 32 transits per day and draughts to 13.41 metrer in order to conserve water at Lake Gatun.
The ACP, which plans to keep these limits in place for several months, has also curtailed the number of special auctions and extraordinary auctions per day for ships vying for booking slots to cross the canal.
US imports account for 73 percent of goods that transit the canal and are valued at $270 billion (€252 billion) annually, according to Container xChange.
“With inventories falling and demand expected to rebound, the Panama Canal, which carries 40 percent of container traffic from Asia to Europe, is likely to experience increased pressure,” Container xChange Chief Executive Christian Roeloffs said.
On Tuesday, Leth Agencies said there were 134 ships in the queue to enter the Panama Canal, with wait times as long as 14 days on the canal’s smaller locks.
Shippers should expect the canal delays to persist for a long time and cause worse supply-chain disruption than the pandemic did because of the crucial role the passage plays in international shipping, financial advisory group AlixPartners said.
“In an age of persistent disruption, the next ‘black swan’ event may be lurking in Central America,” the advisory firm said.
Shippers should always be ready for supply-chain disruption by prioritizing shipments, evaluating flexibility to absorb delays, exploring alternative routes and expecting higher shipping rates, AlixPartners said.
In March 2021, the Ever Given containership blocked the Suez Canal, the world's busiest trade route for over six days.
Before that, as the global COVID pandemic took a grip across the world, seafood and many other industries suffered from soaring shipping container rates and reduced shipping options, battling for space aboard vessels.
As the crisis unfolded, shipping containers became stranded in parts of the globe where they were not needed due to congestion at ports sparked by COVID checks, combined with spikes in demand for commodities and consumer goods shipped from China in particular.
Stringent checks on cargo entering China under the Beijing government's COVID zero tolerance policy and pressure on portside warehousing space in the United States compounded reduced container availability and sparked further delays.
Refrigerated container freight rates remain well above rates for dry cargo freight, despite an unprecedented contraction in reefer seaborne trade last year.
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