Logistics News, Shipping News

Panama Canal delays set to affect Christmas shoppers

Wait times of up to three weeks are set on have on a flow on effect on businesses

Concerns regarding long shipping wait times in the Panama Canal are growing as the Christmas period draws closer, with many businesses soon to be impacted. Water conservation efforts being used by the Panama Canal Authority due to the country’s unprecedented drought are only further impacting these wait times and capacity limitations. 

Current waiting times are hitting a peak of as long as 21 days, with many businesses facing the reality that they may be unable to replenish inventories in time for the holidays. Co-founder and CEO of Container xChange, Christian Roeloffs believes the Canal’s issues may continue despite other positive figures.

“Ongoing challenges at the Panama Canal are making existing worries for industries even worse,” Roeloffs says.

“New industry information shows that the U.S. economy’s consumer spending has seen an uptick, which is good.  With inventories falling and demand expected to rebound, the Panama Canal, which carries 40 per cent of container traffic from Asia to Europe, is likely to experience increased pressure.” 

While some sailings are choosing to re-route, upping their delivery times, approximately 10.8 per cent of the regular sailings between Central China and Europe are being cancelled. Cancellations of sailings in trans-Pacific trade lanes are starting as a result, as reported by several prominent industry sources, including Alphaliner, Sea-Intelligence, and Drewry.

These wait times are having a particularly large effect on U.S. shippers, who’s sailings make up approximately 73 per cent of all Panama Canal traffic. That accounts for around $270 billion in cargo, most of which is now either stuck waiting or taking longer shipping options. This is set to have a flow-on effect in the cost of making these shippings, Roeloffs believes.

“These supply chain disruptions are expected to reverberate throughout the industry, with potential consequences for container prices,” Roeloffs says.

“The ongoing congestion and reduced capacity have led to heightened competition for available slots, driving up spot freight rates. The scarcity of available vessel capacity has prompted carriers to re-evaluate pricing strategies to offset increased costs and uncertainties. Consequently, the traditional equilibrium of container prices may experience adjustments to accommodate the challenges of the Panama Canal congestion.”

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