Logistics: Canal in dire straits

The Panama Canal Authority has suspended auctions of special-access slots in September, reducing the flexibility of shipping lines to avoid queues to access the route. Average waiting times are currently 11 days, down from a 19-day peak but above the 2-day average prior to the current issues.
· The three primary alternatives to using the Panama Canal for US east coast-bound traffic are (a) sail via the Suez Canal; (b) sail via Cape Horn; or (c) sail to the US west coast and use onward rail from there. The third option is particularly suited to seasonal traffic scheduled to reach the US west coast for the peak sales season.
· There is already evidence of a rotation back to using US west coast ports after a dip linked to concerns regarding port strikes. The share of US imports of consumer goods headed to west coast ports rose to 54.7% in August 2023 from 51.7% in August 2022, Panjiva data shows. In July, the share in 2023 was 52.0% compared to 54.9% in 2022.
· There’s also evidence of a shift in shipping patterns from container shipping rates. The rate for shipping from mainland China to the US west coast increased by 12% on September 8 versus July 31, 2023, according to Shanghai Shipping Exchange data. The rate for shipments to the US east coast only rose by 6% during the same period.
Freight forwarder C.H. Robinson Worldwide Inc. is opening a new cross-dock facility at Laredo, Texas, the Journal of Commerce reports. The facility will allow C.H. Robinson to increase its handling of traffic from Mexico. The firm is citing the fact that “a growing number of global shippers are nearshoring to diversify and spread out their risk.”
· Mexico has been at the forefront of reshoring to access the North American market. It’s not the only game in town, however, as discussed in “Time for phase two: Mexico as a supply chain reshoring center,” making strong infrastructure connections vital.
Source: S&P Global Market Intelligence