Supply Chains in the Middle of Chaos Again


Supply chains find themselves facing tremendous challenges once again, as the current shipping market remains inflated with carriers looking to implement general rate increases before the Chinese Lunar New Year due to unexpected demands.   Also, the delicate political situation in the Middle East where the Houthi terrorist group in Yemen is launching attacks on vessels transiting through the Red Sea is further complicating shipping dynamics, and forcing carriers to deal with significant operational challenges by having to divert vessels from the Suez Canal where approximately 12% of global trade passes by to the much longer route around the Cape of Good Hope in Africa which is also having an impact on ocean freight rates.

In our hemisphere, shipping is also under significant pressure since the Panama Canal Authority (Autoridad del Canal de Panama – ACP) has imposed significant weight restrictions on vessel weights and slots, as a severe drought has reduced the water depth in the Gatun Lake which is the water source for the canal.   The ACP has currently limited traffic to 24 vessels per day, which represents a 33% reduction from the regular average of about 36 vessels per day. Approximately 5% of global trade passes through the Panama Canal under normal conditions.   

FreightWaves recently published an excellent article titled “Despite economic worries, more containers flow from China to US. Consumer confidence in China is rock-bottom, but American importers still need goods” which you can access here.

While it is impossible to predict how this situation will evolve, especially if the Red Sea situation persists, we will keep adjusting to market conditions to continue to offer our clients the best solutions possible.