Panama Canal situation

Currently spared from chaos, the Panama Canal finds an unexpected ally in the form of a demand lull, preventing disruptions that would have posed a significant challenge for westbound trade shippers.

At present, container shipping trade flows remain unencumbered. The ongoing challenges, compounded by the Panama Canal Authority’s water conservation measures in response to drought, have led to prolonged wait times, capacity limitations, and additional strain on shipping schedules. Measures like the restriction of booking slots and adjustments to vessel weight requirements have further elongated waiting times.

The resulting supply chain disruptions are expected to reverberate throughout the industry, potentially impacting container prices. Heightened competition for available slots has driven up spot freight rates, prompting carriers to re-evaluate pricing strategies to offset increased costs and uncertainties. Several carriers have already announced new fees for Panama transits including MSC who will impose a US$297/container Panama Canal Surcharges (PCS) from 15 December.

According to the Panama Canal Authority, the average daily queue of non-booked vessels waiting for transit has increased from 2.5 days on November 4, 2023, to 9.3 days as of November 28, 2023, for northbound vessels. Southbound vessels have experienced a similar trend, reaching an average waiting time of 10.5 days.

As a response to the crisis, carriers are redirecting more volume to the U.S. West Coast or opting for routes via the Suez Canal. This shift in shipping patterns may impact transportation costs, delivery times, and overall supply chain efficiency for U.S. businesses. The potential escalation of intermodal volume to the U.S. West Coast could affect capacity and efficiency, leading to increased costs or delays for businesses relying on these services.

In the face of the most severe drought the?Panama Canal?has experienced in half a century, we are working towards adjusting our operational outlook to support your cargo planning. The drought has had a serious impact on container ships by posing draft limits whereby space and weight allocations are challenged. In addition, the daily vessel transit has been capped to a specific number of vessels per day, presenting additional challenges to transit the Panama Canal on time.

Despite our preparations, the canal's restrictions present uncertainties, and therefore, we are constantly evaluating the operational situation, including regular discussions with the authorities to obtain the latest information. In view of this situation, our teams are engaged in taking all the necessary measures to continue supporting your supply chain requirements.

With the above facts, North Line Shipping will be implementing the Panama Canal Surcharge (PCC). You can find more information on this by getting in touch us. Please keep in mind that we remain dedicated to keeping you well-informed about any developments caused by the evolving situation at the Panama Canal.?