Container shipping line Maersk has changed its services due to the ongoing drought affecting the Panama Canal and is instead opting for a ‘land bridge’ to mitigate disruptions.
The company said that it is amending its OC1 service which operates between Oceania and the Americas. Rather than use the Panama Canal route, Maersk will use a rail land bridge to transport cargo across the 80km of Panama.
The land bridge will have two separate loops, with one for the Atlantic and one for the Pacific. The Pacific route will turn at Balboa, Panama to drop off cargo heading for Latin and North America, and pick up cargo heading for Australia and New Zealand. Meanwhile, the Atlantis route will have vessels turn at Manzanillo, Panama to drop off cargo heading for New Zealand and Australia and pick up cargo heading for Latin and North America.
Maersk said southbound vessels may experience some delays, but northbound vessels stopping in Philadelphia and Charleston will have no changes to delivery times.
In a customer advisory, the firm said: “We are working diligently to minimise any impacts to your supply chain, and we remain in close contact with the Panama Canal Authority (PCA) to ensure that we can give you timely updates.”
The low level of water in the canal has been disrupting shipping operations for months and has led to shipping backlogs, causing deliveries to be missed and delayed for many automotive logistics companies. The PCA has been taking measures over the last eight months to try to mitigate the effect of the low tides, and announced in November that the average number of vessels moving through the canal per day would be reduced to 31 from 36.
In its latest update on 28 December, the PCA said the situation has been “extremely severe”. Ricaurte Vásquez Morales, Panama Canal administrator, PCA said the situation at the Panama Canal is “getting further complicated by the conflict in the Middle East”.
He said: “This situation has included attacks to some of the vessels going through transit to the Suez Canal. In a world like today with high inflation and higher cost, any disruption at Suez will further complicate the situation in global trade and further create worse expectations on the use of the Panama Canal and the limitations that we impose to international trade due to a lack of water.”
Maersk has already announced it is avoiding the Suez Canal due to the ongoing attacks in the Red Sea.
“We expect that the situation in the Middle East is resolved and somehow transit to the Suez Canal remains flawless and we continue to serve the world within our respective capacities,” Morales said. “Otherwise, shipping lines will likely consider the possibilities of longer routes and by doing that, that will lead to additional cost increases that will further expand the spread of inflation around international trade.”