Traffic Jam In Panama Canal Could Take 10 Months To Clear Up, New Data Shows

Drought conditions resulting in a massive Panama Canal traffic jam have led to its extension for at least another ten months, indicating that holiday shopping will be impacted as vessels crawl via the canal.

Per new data recently shared with Insider by the supply chain visibility startup Project44, the wait time for vessels not booked with the canal has jumped to 280% since June this year.

It used to take approximately two-and-a-half days to pass via the Panama Canal, but now vessels have been taking an extra week to make it through, averaging a nine-and-a-half day journey.

Since vessels are taking longer to move via the body of water, delayed shipments will likely screw up the holiday shopping plans.

According to Insider, the drought regulations for the Panama Canal have been extended for at least ten months, indicating that the restrictions will impact holiday shopping this year, said Jenna Slagle, a Senior Data Analyst associated with Project44.

Slagle said that this is the thick of the peak shipping season – when retailers ramp up shipping, anticipating increased demands with the holiday shopping season.

Slagle added that there are already “severe restrictions” on the number of ships that can pass through the canal and the amount of cargo a vessel is permitted to carry, ending up in colossal wait time to sail through, particularly for ships with no proper bookings.

Project 44 mentioned that the delays are falling on the ships without scheduling appointments with the Panama Canal Authority. Shippers who are familiar with the channel, proactively schedule appointments, and maintain robust communication channels with the canal are experiencing fewer disruptions than those infrequently using the route, the organization explained.

Slagle added that as delayed vessels gradually reach the intended destination, we expect to experience downstream effects on holiday shopping with out-of-stock items.

Besides, the Panama Canal Authority can also place a high price on vessels that sail via the canal, so the shippers might need to use relatively smaller boats for transporting goods. Either way, the higher prices for ships mean higher rates for the items they bring to the area, per Slagle.

The overall rise in the shipping costs could be passed to consumers, driving up the rates of goods and services dependent on the crucial maritime channel, per Slagle.

The Panama Canal traffic can be drawn up to unforeseen conditions in Panama. The canal also relies on rainwater to replenish itself. However, a lack of rain in the summer has made it more challenging for vessels to get through.

References: Business Insider India, ABC News