1 September 2023Article
Panama Canal supply chain disruption

Impact on global supply chains as Panama Canal’s operations are affected by a water shortage caused by insufficient rainfall in the past year.

Panama Canal’s operations have been impacted by a water shortage caused by insufficient rainfall in the past year.

As a result, the Panama Canal Authority has put in place a water restriction for 10 months, reducing the daily number of allowed transit vessels from 36 to 32. Additional lower water level restrictions imposed by the ACP require vessels to be 40% lighter, requiring more vessels to move the same amount of product. The resulting congestion and delays are currently mainly affecting tankers, LPG, and bulk container vessels, with delays of up to 2 weeks. Container ships, alongside cruise ships and LNG are given priority, with minimum impact on global supply chain clients thus far.

Data shows that despite the challenges, the situation is still under control and it is not yet to be considered a crisis. Container ship traffic using the Panama canal has seen some delays and added costs but the impact so far has been minimal. Container ships have not seen major disruptions with almost unvaried average waiting times, at less than a day.

Panama canal waiting times

Overall, while challenges persist, the impact of the Panama Canal restrictions on container trade remains manageable, with potential alternatives available if the constraints continue or intensify in the future. Rerouting, transship and multimodal options are all possible alternatives for cargo from Asia and/or to/from North and South America.

We will continue to monitor this developing situation, and update you of any changes.

If you have any questions or concerns, please contact us here.

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