Supply Chain: Planning For Water Logistics Constraints

Supply Chain: Planning For Water Logistics Constraints

Share to Linkedin On March 23rd, 2021, supply chain issues became headline news when the Ever Given, a 20, 000 TEU container ship, blocked the Suez Canal. Over the past two years, the supply chain was plagued with transportation issues impacting cost and reliability. This week, another shoe dropped. On May 24th, The Panama Canal Authority (ACP) announced a restriction in weight of ocean vessels moving through the locks. A second restriction, announced on May 30th, reduces the draft to 44 feet. So what? Who should care? I believe this is a canary in the coal mine. If we have a long, hot summer, expect more logistics constraints. Water levels decreased at the Panama Canal due to severe drought, forcing vessels to lighten their loads and shippers to pay higher rates. Following the announcement, Hapag Lloyd announced a PCC (Panama Canal Charge) of $500 per container effective June 1 on all cargo loaded on its Asia to US east coast sailings via the canal. In addition, this drought is another factor affecting supply chain lead time variability making it difficult to predict inbound deliveries. TOPSHOT - A ship navigates through the Panama Canal in the area near the Americas' Bridge