{"id":1478487,"date":"2024-07-21T22:40:00","date_gmt":"2024-07-22T02:40:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1478487"},"modified":"2024-07-21T22:40:00","modified_gmt":"2024-07-22T02:40:00","slug":"la-nina-boosts-panama-canal-houthi-threat-drives-up-shipping-costs-through-suez","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/la-nina-boosts-panama-canal-houthi-threat-drives-up-shipping-costs-through-suez\/1478487\/","title":{"rendered":"La \u00d1ina Boosts Panama Canal; Houthi Threat Drives Up Shipping Costs Through Suez"},"content":{"rendered":"

La \u00d1ina Boosts Panama Canal; Houthi Threat Drives Up Shipping Costs Through Suez<\/span><\/p>\n

\n

By Stuttgart Daily Leader<\/a><\/em><\/p>\n

While\u00a0La \u00d1ina<\/a>\u00a0is helping ease the traffic knots at the Panama Canal, repeated attacks by Houthis \u2014 some fatal \u2014 have driven shippers to find alternatives to the Suez Canal, said Ryan Loy, extension economist for the University of Arkansas System Division of Agriculture.<\/p>\n

The Panama Canal is a key route for global trade, including for Arkansas commodities such as soybeans and corn. In March, the United Nations Conference on Trade and Development said that traffic through the Panama Canal had dropped 49 percent since 2021 and 42 percent in the Suez Canal during the same period.<\/p>\n

<\/a><\/p>\n

\u201cAbout 26 percent of U.S. soybeans and 17 percent of U.S. corn is transported via the Panama Canal,\u201d Loy said. \u201cAnd this is important to us, especially in Arkansas, because a lot of our grain goes down the Mississippi River to the Port of New Orleans.\u201d<\/p>\n

Arkansas\u2019s export soybeans and corn go through the Panama Canal to get to Asia, Loy noted.<\/p>\n

Long-term drought across Central America was strangling the Panama Canal. While the passage connects two oceans, the water used to raise and lower ships between the coasts comes from Gatun Lake, a fresh water body. Each ship transit requires 52 million gallons of water. The lake fell to its lowest levels in five years last June, hitting 79.5 feet.<\/p>\n

\u201cIt was a very dire situation,\u201d Loy said. The alternative to the canal would mean sailing around Cape Horn at the bottom of South America, costly in fuel and fraught with dangerous weather.<\/p>\n

Lower lake levels meant shallower water in the locks. The Panama Canal Authority ended up restricting the number of ships making transits. Ships that could make the trip had to carry less cargo to prevent their hulls from hitting bottom.<\/p>\n

However, the return of La \u00d1ina has meant replenishing rain for the lake and the canal authority has not only increased the number of ships allowed through, but also allowed heavier ships that sit more deeply in the water.<\/p>\n

As of July 11, the canal authority was \u201cincreasing the number to 33 ships a day. Then on July 22, they\u2019re going to allow 34 ships a day and on Aug. 5, they will open up one more spot for the Neopanamax ships.\u201d<\/p>\n

\u201cNeopanamax\u201d refers to the largest ships than can pass through the canal\u2019s newest locks, which opened in 2016. These vessels can be up to 1,202 feet long, 168 feet wide and have a draft of 50 feet. Draft is the distance between the ship\u2019s waterline and its lowest point.<\/p>\n

\u201cThis is very close to what they used to do \u2014\u00a0 38 ships a day \u2014 so we\u2019re getting close to normal,\u201d Loy said.\u00a0 \u201cJust for comparison, in November 2023, they were at 24 ships a day, so you can see how much we\u2019ve kind of improved since then.\u201d<\/p>\n

Should drought return the canal to its restricted state and if China\u2019s soybean crop is poor, \u201cthat leaves Brazil an opportunity,\u201d he said.<\/p>\n

Brazil is a key rival to the U.S. for soybean trade and doesn\u2019t rely on the Panama Canal.<\/p>\n

\u201cBrazil can come in and say, we don\u2019t need the Panama Canal. We can transport our grain via rail and trucks to the Pacific. They have a lot of it and it\u2019s much cheaper,\u201d Loy said. \u201cSo those are the kind of implications of what could happen if the drought comes back.\u201d<\/p>\n

Suez Canal<\/h2>\n

The Suez Canal is a critical route, carrying an estimated\u00a012-15 percent of global trade<\/a>.<\/p>\n

Since starting in November 2023, Houthi attacks in the Suez Canal have become fiercer, resulting in the deaths of four crewmembers from attacks on two ships, the MV True Confidence and the Tutor.<\/p>\n

MarineTraffic.com, which tracks global shipping, reported a 79.6 percent reduction in dry bulk carriers \u2014 whose shipments include grain \u2014 passing through the Suez, just 24 ships in June, compared to 118 in June 2023. The amount of cargo passing through the canal in May was 44.9 million tons, down from 142.9 million tons in May 2023.<\/p>\n

The U.S.\u00a0Defense Intelligence Agency<\/a>\u00a0said many shippers were opting to avoid the canal and the Houthis, including British Petroleum, Evergreen, CMA CGM, Hapag Loyd and Maersk.<\/p>\n

Maersk resumed its use of the canal in June, since taking the the Cape of Good Hope route around the tip of South Africa added an estimated $1 million in fuel costs and one to two weeks in additional transit time, according to the U.S. Naval Institute. Rounding the cape is still perilous, with one ship running aground and another losing cargo, according to\u00a0Bloomberg<\/a>.<\/p>\n

The Suez Canal\u2019s decreased traffic meant the port authority\u2019s yearly revenues were nearly halved, from $648 million last year to $337 million, Loy said.<\/p>\n

\u201cThe areas surrounding this are also impacted, too, because people\u2019s jobs, people\u2019s livelihoods depend on traffic through the Suez Canal,\u201d he said, and \u201cthat\u2019s tough for that region.\u201d<\/p>\n

Houthis are only attacking ships affiliated with the U.S., Israel and their allies, affecting insurance premiums for the carriers.<\/p>\n

\u201cThe total premium for U.S.-based cargo is 1.7 percent of total freight on board,\u201d Loy said. \u201cBecause they\u2019re not attacking Chinese ships, the Chinese premium is just 0.2 percent of the value of total freight on board.\u201d<\/p>\n

Where does this leave consumers?<\/p>\n

\u201cI\u2019m surprised that we haven\u2019t seen much increase in items at the grocery store, even vehicles, or whatever it may be, anything besides grain, that are separate from our inflation issues,\u201d Loy said. \u201cThe expected big ripple effect is having a little bit less of an impact than most people thought.\u201d<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nSun, 07\/21\/2024 – 18:40<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/economics\/la-nina-boosts-panama-canal-houthi-threat-drives-shipping-costs-through-suez<\/a>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

La \u00d1ina Boosts Panama Canal; Houthi Threat Drives Up Shipping Costs Through Suez By Stuttgart Daily Leader While\u00a0La \u00d1ina\u00a0is helping ease the traffic knots at…<\/p>\n","protected":false},"author":0,"featured_media":1478488,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1478487","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","wpcat-1-id"],"_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1478487","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1478487"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1478487\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media\/1478488"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1478487"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1478487"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1478487"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}