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HomeIndustry NewsOngoing Panama Canal Drought Conditions Likely to Drive Further Surcharges

Ongoing Panama Canal Drought Conditions Likely to Drive Further Surcharges

The ongoing drought conditions in the Panama Canal, the worst in 73 years, is disrupting the number of daily transits in the canal.

The normal level of transits per day is around 30 to 40 vessels. The Panama Canal Authority plans to cut down the number of guaranteed booking slots to 18 by February 2024. In response, ocean carriers are rerouting vessels and cancelling sailings. This will result in longer transit times and higher costs.

Up until now, the type of ships that were mostly impacted were tankers and bulk carriers. Now, we are starting to see container liners consider other options such as the Suez Canal for Asia-U.S. cargo. Importers again are confronted with the prospect of increased shipping costs, including extended transit times for container shipments.

Back in August, I wrote an article about carriers introducing a $300/container surcharge for all cargo transiting the Panama Canal. Now, carriers are poised for another round of increases as they are forced to limit the number of containers they can transport per sailing.

Here are a few carriers that were the first to announce surcharges (but surcharges are not limited to only these carriers):

In response to the Panama Canal limitations, carriers are considering utilizing more ships via the Suez Canal.

For the Shanghai to New York route via Panama, the normal transit time is about 28 days for a 10,600-mile route. If a carrier were to instead route via the Suez Canal, there are an extra 5 days for the extra 1,800 miles to the voyage.

Another option to avoid the Panama Canal is to ship via the U.S. West Coast for the intermodal connectivity. For example, our MTS Trucking Service can offer warehousing and transloading in California, giving us the agility to coordinate last mile deliveries across the U.S.

As shipping patterns change, it’s important to partner with a freight forwarder that can offer quick and flexible options.

At MTS Logistics, we partner with all steamship lines. For access to sailing schedule options, please register for our user-friendly MTS Dashboard software platform.

MTS Logistics Dashboard Software
Marc Holder
Marc Holderhttps://www.mts-logistics.com
Marc has a degree in Business Management from the University of Texas at Dallas. He began his career in 2013 at Evergreen Shipping, where he worked as a Vessel Coordinator, gaining expertise in ocean shipping. Transitioning to the U.S. Imports/Exports sales team in the Gulf Region, Marc showcased dedication and industry knowledge. Since September 2019, he has worked at MTS Logistics as a Sales Executive. He was recently appointed as Vice President of Sales, a recognition of his leadership and commitment to customer service. In his free time, Marc enjoys outdoor activities with his family, hiking, and playing basketball.

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