Canal and geopolitical issues are continuing but we are seeing some positive rate movement

Suez Canal – Continuing geopolitical challenges in the Red Sea, a vital route to the Suez Canal, have led to ships rerouting around Africa’s southern tip, significantly increasing costs and voyage durations. The attacks prompted the rerouting of hundreds of vessels, adding 7 to 20 days to their voyages around Africa’s Cape of Good Hope. Rates for Asia-to-North America’s East and West Coasts have also surged, with logistics executives anticipating cargo diversions to avoid Red Sea-related issues. The Red Sea crisis coincides with drought issues in the Panama Canal. FreightWaves reports that cargo from Asia bound for East and Gulf Coast ports had initially been switched from Panama to the Suez Canal but is now undergoing further rerouting around the Cape of Good Hope.

Panama Canal – Due to water levels continuing to dwindle, the Canal Authority has been forced to restrict reservations. As we approach the rainy seasons, typically spanning from May through December, there is hope that water levels will rise, alleviating some of the current constraints. However, the situation highlights the urgent need for alternative strategies to manage reservations and ensure the Canal’s operational efficiency amidst environmental conditions. Capacity is still about 24 ships per day with projections of increasing with the coming rains.

Ocean Freight Rates – While we saw the cost for a number freight lanes reduced in March, the situations in the Red Sea and Panama Canal continue to keep rates elevated. Projections are that we will see further reductions in the next 30-45 days.