Global Import Delays & The Panama Canal Crisis

Industry Update: Global Import Delays & The Panama Canal Crisis

This year, the industry has seen increased hardships due to congestion and disruptions of the world’s main commercial canals; the Panama Canal and the Suez Canal. Here’s what we know, and what we should expect in the new year:

In the fall of 2023, the Panama Canal Authority began cutting back on vessel transits as a result of the drought conditions that the canal was experiencing. These vessel reductions ultimately caused the re-routing of vessels to the Suez Canal to limit the shipping delays as much as possible. The number of available appointments and transits will continue to decrease through February of 2024 showing an overall reduction of over 50%.

The Suez Canal has since become much busier with the influx of vessels, so delays were expected. However, the last two weeks have seen an even bigger increase in delays due to the attacks on ships by the Houti Rebels.

With the increased attack risk of going through the Suez Canal, and the delays going through the Panama Canal, some carriers are looking for alternative routes like the Cape of Good Hope in Africa. While the new routes should be safer for ships, it is going to cause another significant delay in transit. The route between Asia and the U.S. via the Cape of Good Hope is 37% longer than the route through the Panama Canal.

The U.S./Asia trade markets aren’t the only markets affected by these forced new route paths either. The Europe/Asia trade markets will also see delays for ships that have to reroute to the Cape of Good Hope (a 32% increase in transit time, compared to using the Suez Canal).

As of December 19, most major ocean carriers have paused moving through the Suez Canal to avoid attack risks, and will be rerouting to South Africa. This diversion will add 30 days to the transit time to the U.S. East Coast.

What do importers and shipping partners need to be aware of?

• Decreasing daily vessel allowances and steady congestion in the Panama Canal
• Added delays in early 2024
• Possible increased shipping rates through 2024
• Attacks on more ships going through the Suez Canal
• Port congestion globally

The Western Overseas team will continue to monitor the transit paths and keep our customers informed on any new developments in the matter. If you have any questions, as always, reach out to your Western Overseas representative.