International Logistics

The shipping industry is once again grappling with supply-demand imbalances, port congestion, and container shortages reminiscent of what has been experienced during the pandemic. However, this time the disruptions are generated by the unfolding Red Sea crisis.

The Panama Canal seems to be returning to its pre-drought condition. The Panama Canal Authority anticipates regaining full capacity in early 2025. Disruption to Red Sea container shipping is rising, forecasting this will cut the industry’s capacity between Asia and Europe by up to 20% in the second quarter.

The end of Panama’s dry season is in sight, and the Panama Canal Authority (ACP) plans to welcome more vessels in the coming weeks. Over six months since the Panama Canal’s reservoir system suffered from the driest October in at least 73 years, the ACP finally sees a path to normalizing operations.

The Panama Canal Authority is taking further steps to ease some of the restrictions on transits imposed due to water restrictions. Starting late March, they are increasing available spots for daily transits by a further 12%.

The Red Sea shipping crisis has impacted in the supply chain in several ways. According to Jose Asumendi at J.P. Morgan, “depending on the situation in the region, shipping times and prices may change throughout the year. Traffic in the Red Sea may remain low for the foreseeable future.”

In a Notice to Shippers, the ACP said it will increase the number of daily transits to 24. This measure is effective as of January 16, 2024 and will remain in place until further changes in condition.

French carrier CMA CGM is set to become the first major carrier to apply a new surcharge on shipments transiting the Panama Canal. Transatlantic Eastbound – most carriers have come out with their European Union Emission Trading System (ETS) charges, effective January 1, 2024.