How could Spain’s Drought impact Container Shipping Logistics?

The Spanish government has approved a €2.2bn plan to aid farmers and consumers in dealing with an ongoing drought worsened by the record-breaking dry and hot April. The measures, unprecedented according to the government, involve allocating €1.4bn for water management and availability, and €784m to support farmers and prevent food shortages.

Spain’s drought could impact container shipping logistics in four ways:

• Reduced agricultural exports – Spain is a major exporter of agricultural products, including fruits, vegetables, and wine. The drought is impacting agricultural production, leading to lower export volumes.
• Increased import costs – With less local agricultural production, there is a greater reliance on importing food products from other countries, leading to higher shipping volumes and potentially high freight rates.
• Port operations and water availability – Drought conditions can impact water levels in rivers and reservoirs, there may be limitations on water usage for various port operations, including container handling equipment, which can impact efficiency and productivity.
• Shifts in trade patterns – If a drought in Spain persists for an extended period, it can lead to changes in trade patterns. Businesses may need to source products from alternative regions with sufficient water availability, leading to shifts in supply chains and potentially altering container shipping routes.

Source:
1. Unprecedented €2.2bn drought response plan approved in Spain, The Guardian, May 11, 2023. Accessed June 12, 2023.