2024 Global Shipping Issues Threat Assessment

2024 Global Shipping Issues Threat Assessment

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Healthcare Ready is MONITORING for this event. We are monitoring potential concerns for supply chain disruptions and impacts on healthcare services on our response page, listing resources and previous situation reports.

Situation Overview

  • Panama Canal

    • In late 2023, Panama was confronted with an acute drought of unprecedented severity, significantly impacting the operational capacity of the Panama Canal. As a result, canal authorities were compelled to implement measures aimed at reducing shipping activities through the waterway.
      • The Panama Canal plays a pivotal role in facilitating approximately 80% of global trade an approximately 40% of US container trade. However, the recent drought-induced decrease in water level has necessitated a reduction in operational capacity. Consequently, canal authorities have been limited daily passage of vessels from 38 to 24, reflecting a substantial adjustment in shipping activities.
      • Anticipating peak reduction in canal traffic will escalate to 40% within the current month, underscoring the profound impact of drought conditions on a vital artery of international commerce.

    Red Sea and Suez Canal

    • Since November 2023, there has been a concerning uptick in attacks by Houthi rebels targeting commercial shipping vessels navigating the Red Sea. The escalating threats posed by these incidents have prompted shipping conglomerates, including Maersk, MSC, and others to take proactive measures such as temporarily halting or rerouting shipments away from the Red Sea and Suez Canal.
      • The Suez Canal accounts for ~15% of global trade and ~20% of container trade. With shipping vessels having to detour and reroute from the Suez Canal, they are traveling along the southern tip of Africa which is resulting in delayed shipments due to the longer travel times.
      • Additionally, many commercial shipping vessels coming from China were using the Suez Canal due to the drought affecting the Panama Canal – but now impacts on both are further exacerbating shipping issues.

Supply Chain Impacts

  • Attacks on shipping vessels, alternative shipping routes around the canals, and restrictions on the number of shipping vessels able to pass through the Panama Canal are all reasons as to why there could be severe supply chain impacts.
  • Not only are shipping vessels experiencing extended transit times, but those going through the Panama Canal are also facing constraints on capacity and size, due to diminished water levels. Consequently, the movement of goods has been impeded by both capacity limitations and the necessity for longer shipping routes, further exacerbating delays in product transportation.
  • Shipping cost rates have steadily increased since December 2023 and will likely stay that way with the attacks in the Red Sea and Panama Canal drought impacts.
    • Detouring from the Red Sea and having to go around the southern tip of Africa adds an additional 10-12 days of sailing and an additional $1 million in extra fuel. This means that suppliers looking for alternative shipping routes or converting to air freight will have significant cost increases which will likely affect the consumers.

About Healthcare Ready

Healthcare Ready is a 501(c)(3) nonprofit organization that works to ensure patient access to healthcare in times of disaster, emergency, and disease outbreaks. We leverage unique relationships with government, nonprofit and medical supply chains to build and enhance the resiliency of communities before, during and after disasters. Learn more about Healthcare Ready

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