Global Logistics Alert: Panama Canal Drought

global logistics alert

Alert Message:

The Panama Canal drought is causing a shipping bottleneck with ripple effects on supply chains worldwide. The canal is a critical waterway for shipping goods between the Atlantic and Pacific oceans, and the low water levels have forced the canal authorities to impose restrictions on the size and weight of ships that can pass through.

The Panama Canal is the primary route for 57% of the total cargo transported in container ships from Asia to the eastern coast of the US. According to Reuters, the average wait time for non-booked vessels at the Panama Canal jumped by between 44% and 59% last month as the drought has led to restrictions on daily transits. Earlier this year, the Panama Canal Authority began imposing the restrictions in a move to conserve water. Currently, only 32 vessels with a draft up to 44 feet are allowed to pass per day.

What can businesses do to mitigate the impact on their supply chains?

  • Diversify their shipping routes. Businesses should consider using alternative shipping routes, possibly importing to U.S. eastern seaports, to avoid the Panama Canal. An experienced freight forwarder, like Logistics Plus, can assist in evaluating the transit time and cost trade-offs of such routes.
  • Work with suppliers to manage inventory. Businesses should work with their suppliers to manage inventory levels and ensure that they have enough stock on hand to meet customer demand.
  • Communicate with customers. Businesses should communicate with their customers about potential delays and disruptions caused by the drought.

You can read the full article from Reuters at The Wall Street Journal also produced the following short video a couple of weeks ago to illustrate how the drought is impacting supply chains.

Logistics Plus is actively monitoring the situation to avoid supply chain disruptions. If you have any questions about how the drought may be impacting your supply chain, contact our team of experts today.