Persistent drought conditions in Central America are responsible for a global logistics challenge. The Panama Canal is vital for trans-Pacific routes. Severe drought has affected water levels in the canal, which are not expected to recover until at least 2028. Insufficient water levels result in congestion and capacity problems that have prompted carriers to explore alternative routes.
These alternate routes face their own challenges. Diverting shipments through the Suez Canal adds thousands of kilometers to the journey. Carriers are reluctant to absorb the added cost. It remains to be seen whether they can effectively pass the costs on to shippers in a subdued trans-Pacific market.
Affected shippers must consider the added costs and delays of trans-Pacific shipments as the Panama Canal deals with this crisis. If you need any help navigating this challenging new dynamic, contact our sales team for expert support.