Double Trouble: Global supply chains are bracing for a potential “milder version” of the pandemic’s crisis due to disruptions at both the Suez and Panama Canals. Attacks by Houthi militants in the Red Sea have forced shipping companies to reroute vessels, adding 7-10 days to voyages and potentially doubling ocean freight prices. Meanwhile, drought-induced restrictions at the Panama Canal have further squeezed capacity, limiting daily transits from 36 to 22.

Suez Showdown: Attacks near the Suez Canal have rattled nerves and rerouted vessels. As a result, 90% of Suez-bound container ships are taking detours, removing about 25% of global capacity and causing potential delays of up to 4 weeks. These detours around Africa via the Cape of Good Hope add significant costs and delays, with analysts predicting price hikes of up to 100%.

Panama Pinch: Drought has caused water levels at the Panama Canal to plummet, forcing the Panama Canal Authority to limit daily transits and raise tariffs. While rainfall has brought some relief, a technical solution to the water shortage is two years away. This could significantly increase shipping times and costs, particularly for European and African markets.

Air Cargo Lifeline? While the chaos won’t significantly impact air cargo in the short term due to Christmas proximity, the long-term outlook is murkier. Increased ocean freight costs and longer shipping times caused by both the Suez and Panama disruptions could make air cargo a more attractive option, potentially boosting demand during the air cargo industry’s low season.

Global Impact: The disruptions at both canals are a stark reminder of the fragility of global supply chains. Consumers can expect rising prices and potential shortages as companies struggle to navigate these challenges. Governments and international bodies are scrambling for solutions, with an international task force being set up to address the Red Sea danger. The coming months will be crucial in determining the full extent of this crisis and its long-term impact on the global economy.

Key Takeaways:

  • Suez Canal attacks and Panama Canal drought cause major disruptions to global shipping.
  • Delays, rerouting, and price hikes expected for ocean freight.
  • Air cargo may see increased demand in the long term.
  • Governments and international bodies are working on solutions.