By Sean P. Gazitúa, President & CEO, WTDC
As president and CEO of a worldwide logistics company and foreign trade zone, I am continuously monitoring global events that shape the transit times and costs that affect our clients. In my April 2024 article for Travel Markets Insider, I explored the shipping disruptions attributed to the Red Sea crisis and the drought in the Panama Canal. These themes are just as relevant today, though one concern has subsided while the other has become a new normal, unfortunately. These events resulted in a staggering $1.25 trillion of total trade disruption from August 2023 through April 2024, as estimated by Russell Group Limited, a London-based data and analytics company.
The seasonal summer rains changed the fortunes of the Panama Canal in June 2024, lifting the waterways from historically low levels that caused delays to ripple across global supply chains. The aforementioned Russell Group estimates that $205 billion of commodities were disrupted by the drought, including a $2.2 billion impact on the flow of Perfumes and Cosmetics.
As the water levels increased this summer, the Panama Canal Authority (ACP) gradually increased vessel crossings and now vessel crossings match pre- drought conditions. Plans for a new reservoir to supply drinking water to the growing population while supplying the fresh water required to operate the Panama Canal at maximum efficiency have since been announced. New systems for slot booking have been implemented to increase transit certainty and flexibility, addressing the operational strains caused by the drought. A new Long-Term Slot Allocation (LoTSA) goes into effect on October 1, 2024, for all market segments except liquified gas fuels. And as punctuation that the Panama Canal is now flowing, the container ship MSC Marie transited through the Panama Canal in August 2024. This record breaking Neopanamax vessel boasts a maximum capacity of 17,640 TEUs.
In news less fortunate, the Houthi led attacks on vessels in the Red Sea and Sea of Aden have not waned. The international shipping community is largely avoiding the area altogether, normalizing longer transit times southwards around the Cape of Good Hope in the interests of safety. Maersk has now implemented a ‘Transit Disruption Surcharge (TDS)’ to recover the increased costs to the carrier, as have other carriers. Russell Group estimates a sobering $1 trillion of trade being disrupted by the attacks from July 2023 through May 2024.
As WTDC specializes in worldwide logistics for the Duty Free and Travel Retail sectors, we are a pivotal partner in our customer’s supply chain. Communicating how these global events will impact our clients on a daily basis is a vital part of our partnerships.
