A trade expert based in Illinois says the lack of rainfall in Central America is affecting supply chains.
As operations get back to normal after the COVID-19 pandemic, now a lack of rain is throwing a monkey wrench into the logistics industry and shipping patterns.
Nick Klein, vice president of sales at OEC Group’s Midwest region in Chicago, said drought has affected the vital Panama Canal.
“It is because it’s down about 6 feet and they are limiting how many boats go through it as well as how big the vessels are,” Klein said.
Goods such as meat, bananas, wine and auto parts, commonly shipped via the canal, have to re-route and are facing massive delays.
It is estimated that around 40% of container ships pass through the Panama Canal. More than 14,000 ships traveled through the canal last year.
Klein said the congestion of container ships and energy tankers at the Panama Canal has gotten so bad that some are paying hefty sums to move up in line to cross the waterway, a cost that could eventually be passed onto consumers.
“Most carriers have paid the fee to have appointments, but it’s not cheap so it could be something they may pass on to the customer,” Klein said.
The weather forecast doesn’t look too encouraging. The El Nino weather pattern is predicted to remain in place for sometime, which would result in below normal precipitation through early 2024.
