Impact of the Chinese New Year, Panama Canal & Red Sea on Global Shipping

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As the region enters its dry season, the current restriction on cargo ships using the Panama Canal has created a double whammy for a global supply chain that’s already under severe strain because of the ongoing crisis in the Red Sea. With the number of ships passing through the Canal reduced to 18 from 24, and lower draft limits imposed on vessels to save water, the situation is only going to get worse.

The upcoming Chinese New Year holiday has only added to the challenge as shipping companies rush to ship goods before Chinese factories shut down for the lunar new year which begins on February 10th. Many factories will close for a minimum of 7 days and can often close for 2 weeks.

This unprecedented combination of events means that an additional 10-20 days will likely be added on to standard shipping routes, creating significant delays for industries including automotive, construction and retail.

Extended disruptions, especially container shipping, represent a significant threat to the intricate web of global supply chains, raising the risk of delayed deliveries and higher costs. A container ship typically carries 10,000 containers, which equates to roughly 10,000 customers. That means with every delay 10,000 customers need to be updated and plans put in place to mitigate the impact of that delay throughout the entire global supply chain. In a bid to seek alternative options, some maritime markets are switching certain loads to rail, which runs parallel with the Canal – but this further increases logistical challenges, wait times and cost.

Amidst today’s turbulent business environment, it’s imperative for companies to embed resilience throughout their entire supply chain. The stakes are high, with revenues, profits, and customer satisfaction hanging in the balance. Rather than dreading disruptions and scrambling to mitigate their impacts, top-tier organisations are turning disruption management into a competitive edge. Armed with cutting-edge technology, they’re adept at uncovering the silver linings within each disruptive episode, transforming adversity into opportunity.