The US Warehouse Logistics Crisis of 2023 is Approaching due to the Panama Canal Drought
- Support Operations
- Aug 28, 2023
- 2 min read
Bad News for Supply Chains - The US warehouse logistics crisis is knocking at the door due to the severe drought affecting the Panama Canal. You should start thinking about Christmas 2023 purchases now to avoid disappointment when stores run out of stock.
" Being adaptable means having a backup plan ready in case things don't improve at the Panama Canal."
It's true that the Panama Canal is an integral part of international shipping. As a crucial passageway between the Atlantic and Pacific Oceans, it saves ships the trouble of traveling around Cape Horn, South America's southernmost point.
About 6% of global maritime trade in the world passes through the Panama Canal, highlighting its significance. There were just 807 transits in 1916, but by 1970, that number had risen to 15,523 transits.
In 2022, almost 15,000 ships carrying 520 million metric tons of cargo used the route.
The Panama Canal strengthened American influence in the worldwide intermodal container freight sector, which facilitated the rapid and cost-effective transport of goods and contributed to economic growth.
Panama, one of the rainiest countries in the world, is currently experiencing one of its driest seasons on record while being almost halfway through its rainy season as of August 2023.
The Panama Canal Authority has imposed restrictions on the size and number of ships that can pass through each day and extended these restrictions for at least another 10 months.
The Panama Canal uses freshwater from the lakes in the area. The canal operates on a set of locks that use at least 50 million gallons of water to float each ship through the canal. Because the locks at the Panama Canal run on freshwater, the lack of sufficient rainfall is putting pressure on a crucial international shipping route. As a result, overall wait times at the Panama Canal have increased.
Container ships, which have been given priority despite the limits, have not been significantly affected. The number of vessels awaiting passage via the canal increased to 135 in August from 29 in July; these vessels are typically gas tankers or bulk carriers. As a result, service reliability will suffer, and shipping delays will increase across the United States and Europe as the number of ships waiting five days or longer increases.
Companies in the United States may run into serious difficulties restocking supplies in time for the next holiday season.
Presented by
Current Affairs Research and Development Unit at VCARE Academy
If you have any questions or suggestions, please feel free to contact support operations at suppport@vcare.international and support@vcare.academy
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