Panama Canal

Logistics and supply chain leaders are keeping an eye on escalating tensions overseas, drought conditions in the Panama Canal, and emerging cybersecurity headaches. Here are a few proactive strategies for navigating an evolving supply chain landscape where new risks continue to lurk around every corner.

In an advisory issued yesterday, the Panama Canal Authority (ACP) announced a new adjustment to accommodate the growing demand for transits, by increasing the number of daily slots available in the Panamax Locks. ACP officials said that this announcement was made in response to the present and projected level of Gatun Lake.

From December to January, Descartes reported that U.S.-bound container import volumes rose 7.9%, to 2,273,125 TEU (Twenty-Foot Equivalent Units). And on an annual basis, it found that January volumes were up 9.9%, while posting a 9.6% increase compared to pre-pandemic 2019’s 2,036,393 TEU tally. What’s more, the report noted that the 7.9% sequential increase, from December to January, marked its biggest gain for that period over the last seven years.

Ocean shipping is again at the mercy of environmental and geopolitical events—and the pessimists are winning over the optimists on the high seas.

The motion-blurred image of a carousel that graced the cover of the January Freight Rate Outlook issue of Logistics Management (LM) could easily be reprised for our Global Issue this month. The idea of static elements going round and round in what feels like an endless cycle could be the illustration that best summarizes our current global environment as well.

Ongoing disruptions in the Red Sea and Panama Canal have reinforced the need for manufacturers to have a comprehensive supply chain strategy.

Alternate routes are adding cost, time to global trade

As shippers navigate goods around low water levels in the Panama Canal and risks in the Red Sea, rates are rising and the risk of downstream disruptions is growing.

The Panama Canal Authority (ACP) announced it is raising the number of daily vessel transits to 24, effective January 16, 2024. The current number of vessel transits is 22, ACP officials said, and are divided into six Neopanamax and 16 Panamax vessels, with scheduled increase bringing those numbers to seven and 17, respectively, next month.

From October to November, Descartes reported that U.S.-bound container import volumes fell 9%, to 2,099,408 TEU (Twenty-Foot Equivalent Units), which the company observed is consistent with late-in-the-year declines seen in recent years. For the same period, from 2019 through 2022, volumes were down 8.2%, 8.3%, 5.0%, and 12.0%, respectively.

Ongoing drought conditions continue to impact the ability of large cargo ships to quickly traverse the Panama Canal.

The ongoing drought conditions at the Panama Canal continue to significantly hamper operational throughput on various fronts. At the end of October, data issued by the Panama Canal Authority (ACP) put the current situation into perspective, while also rolling out new operational measures with roughly 50 days (at that time) left in the “rainy season.”

Overall, vessel wait times are at 164.5 hours in September, down from 228 minutes in August. But with the end of rainy season in Panama this month, the prospect of enough rain falling to restore water levels to pre-drought conditions is slim. Water levels in Gatun Lake, which the Canal draws its water from, are at 79.7 feet, off from 87.41 feet a year ago. Typically, water levels are 89 feet at the end of rainy season.

As the drought continues to hamper ocean vessel traffic in the Panama Canal, AlixPartners offers tips on how shippers can manage the current crisis.

Low water levels have caused a backlog of container vessels at the Panama Canal, and that could impact the ability of businesses to restock inventories in time for the holiday shopping season.