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  • Maggie Mildenberger

Panama Canal is Backed Up: What this Means for You

Every single year, 40% of all U.S. container traffic travels through the Panama Canal, which is roughly $270 billion in cargo. In recent months, several challenges have put the flow of that cargo under strain.

Recent headlines may have brought to your attention the impact of a historically severe drought in Panama. This has led the Panama Canal Authority to take a number of aggressive actions, reducing the total number of ships traversing the Canal by 20% and limiting the draft level of those ships passing. For purchasers, that means fewer vessels with fewer containers on them are making the passage each day.

Exacerbating this situation, many vendors and clients had decided to spend extra money and time to ship to the east coast, in the wake of labor unrest unrest and uncertainty at the west coast ports earlier this year. Additionally, more shippers have been choosing to route their orders through the Canal via smaller vessels to secondary ports along the east coast, which could handle the smaller vessels and were close to distribution centers.

The ultimate result is increased congestion and delays for vessels trying to pass through the Canal. While many ships are having to wait a week or less, some customers are reporting delays of up to three weeks, and total congestion has spiked dramatically in recent months.

We expect this situation to continue through to October, when the traditional rainy season should help alleviate the issues caused by the drought in Panama.

Until then, you may want to consider alternative destinations for imported goods, including a return to West Coast ports.

Please reach out directly to your vendor or to your project manager if you have any concerns about the potential impacts and alternatives.


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