Global Trade Ports Impact

*Unusual Vessel Congestion at Panama Canal's Atlantic Anchorage and a 10-20% fee increase* The Panama Canal was recently a lot in the news. President-elect Trump's December 22 statements demanding lower transit fees and suggesting potential U.S. reclamation of the canal have likely introduced additional uncertainty into canal operations. The Canal de Panamá Authority is indeed actually increasing fees and restricted transit slots to manage water levels , leading to extended wait times for vessels in the anchorage area. Meanwhile, according to Windward, an anomalous increase in anchored vessels was detected at the Panama Canal's Atlantic Anchorage area during the week of December 22-29, 2024, with 11 vessels recorded compared to the expected 5 vessels. This 120% increase above normal levels signals significant disruption to normal canal operations. The congestion appears to be driven by multiple factors. First, the Panama Canal has been experiencing operational constraints due to drought conditions, which have forced reductions in daily transit slots and increases in transit fees . These restrictions have created a backlog of vessels waiting for passage. This also could be vessels front -running an increase in passage fees. Although daily transit slots have fluctuated throughout 2024, with positive developments in mid-2024 when slots increased to 36 per day. However, starting January 2025, there will be notable restrictions on transits (10 slots per day and penalizing vessels without reservations) and a 10%- 20% increase in fees ( Panamax locks: Increasing from $41,000 to $50,000 for supers, Neo-Panamax vessels: Rising from $80,000 to $100,000) This congestion has important implications for global shipping, as delays at the Panama Canal can significantly impact supply chains and increase transportation costs for cargo moving between the Atlantic and Pacific oceans. Sources: https://lnkd.in/eAq8BTbS , https://lnkd.in/eEXYEc9f,

Dealing with climate change involves: 1. Telling people unpleasant hard truths which they don't want to hear 2. Sacrifice 3. Not seeing any results for 30 years as the earth system has in-built inertia No wonder politicians prefer to offer simplistic solutions. "In 2023, on a research trip to Panama, I booked a day tour of the Panama Canal. I expected to hear the usual story about the canal’s epic construction, importance in world trade and successful expansion to allow for larger modern ships. What I did not expect was the overwhelming sense of concern, even panic, among people who depend on the canal for their livelihoods. It was July, the middle of Panama’s rainy season. But the rains had been sparse, and water levels in the canal had sunk to troubling lows. Without freshwater from rain, our guide explained, the locks on the canal could not operate." "But Trump misunderstands the true threat to US commerce through Panama. If the goal is securing affordable access to the transit point over the long term, it is climate change, not Chinese influence, that US policymakers should worry about. Here’s why. Sending a single ship through the canal’s locks can use around 50 million gallons (227 million litres) of water, mainly freshwater collected from Lake Gatun. Though the canal is, for the moment, operating at full capacity, a drier climate and greater demand for drinking water have in recent years reduced the volume of available water. That has forced the state-run Panama Canal Authority at times to limit the number of daily passages through the canal, at one point by as much as 40 per cent. With less rain, the reservoirs fill up more slowly, which means less water available to operate the locks, which means fewer ships can pass. Hence, the 2023-24 drought, among the worst on record, slowed transits and drove up transit prices, causing long delays, more expensive consumer goods and greater instability in shipping routes. These were probably the increases Trump referred to as a “rip-off”. The limited number of passages has led to auctions for passage rights that further inflated the growing cost of shipping goods through the canal (the canal authority had increased tolls just before the 2023 drought began). In the short term, reduced access causes goods to take longer to reach their destinations, and they cost more when they do arrive. Over the medium term, companies have begun to seek alternative routes and different methods of moving goods. The 2023-24 drought was due in part to a strong El Nino effect, as rising seawater surface temperatures in the Pacific Ocean altered weather patterns worldwide. Scientists generally agree that climate change is making El Nino events more frequent and more severe. Higher temperatures have increased the evaporation of water off the reservoir, too, further reducing the water supply." https://lnkd.in/g_bh4Jzy

There are moments in this industry that sit heavy. Not because rates move or schedules slip, we live with that every day, but because the systems that quietly keep the world supplied suddenly feel fragile. Over the past few days, shipping has been shaken by a rapid escalation in the Middle East. As tensions rose, vessels slowed, stopped, or turned back, not always on instruction, but out of caution. In the Gulf, tankers are now holding position on both sides of the Strait of Hormuz. When a fifth of the world’s oil and gas normally passes through a single narrow waterway, hesitation alone is enough to disrupt global trade. What makes this hit different? The risk has become real. In the past few days, commercial vessels have been struck in the region, with crews injured and at least one seafarer fatality reported. Other ships have aborted voyages after radio warnings and GPS disruption, even where waterways were not formally closed. The Red Sea was already fragile before this latest escalation. I believe it was just a day before this crisis began, Maersk quietly redirected MECL and ME11 services back around the Cape of Good Hope, citing operational constraints, a signal that confidence in a sustained return to the Suez Canal had not yet returned. Since then, the situation has accelerated. Major carriers have suspended bookings, instructed vessels to seek shelter, rerouted around Africa, and introduced emergency conflict surcharges. The message is clear: safety and uncertainty now outweigh speed. And it’s not only sea freight. Closed airspace across parts of the Middle East is disrupting airfreight corridors, grounding flights, stranding passengers, and delaying time critical cargo. Capacity is tightening just as demand shifts, adding pressure to already complex supply chains. For trade, the effects come quickly. Longer transits. Rising spot rates. Cargo discharging at alternate hubs. Congestion shifting from port to port. And pressure spreading well beyond the region itself. This isn’t about politics.. it’s about trade, about seafarers waiting at anchor, and about supply chains absorbing another shock. For an industry built on movement, these pauses matter, reminding us just how interconnected, and how shockingly vulnerable, global trade truly is. Image credit: BBC

Who's impacted most by transits almost cut in half in the world's two most important international canals - the Suez and Panama canals? For the first time, the world faces *simultaneous* disruptions in two major global maritime trade waterways, with far-reaching implications for inflation and food and energy security. Since November 2023, escalating attacks on ships in the Red Sea have been compounding disruptions in the Black Sea caused by the war in Ukraine and in the Panama Canal due to climate-induced droughts. In both the Suez and Panama canals, transits are down by more than 40% compared to their peaks. Most of the decline in the Suez Canal occurred over the last two months, while transits through the Panama Canal have been decreasing over the last two years. In 2023, approximately 22% of global seaborne container trade passed through the Suez canal. Given the risk of attack in the Red Sea, many ships are now avoiding the canal, opting for a longer route around Africa. By the first half of February 2024, 586 container vessels had been rerouted, while container tonnage crossing the canal fell by 82%. The Panama Canal case is different. Facing alarmingly low water levels, the Panama Canal Authority has reduced daily transits from an average of 36 to 22, with plans for further reductions to 18 per day. The Panama Canal is particularly important for countries on the West Coast of South America. To avoid long waiting times, vessels were rerouted through the Suez Canal for cargo originating from Asia, increasing Suez transits before the current Red Sea crisis. The disruptions in the Panama Canal have increased demand for rail and road transport services in recent weeks, as shippers no longer have the option of rerouting through the Suez Canal. What is the impact and who is hurt the most? 25% of Ecuador's trade volume goes through the Panama Canal, while 22% of Peru's and Chile's does. 2% of China's and 12% of America's does. The Suez is most important for Sudan (34% of trade), Yemen (32%), Djibouti (31%) and Saudi Arabia (26%). The Suez Canal is a major source of foreign currency revenue for Egypt, contributing $9.4 billion in 2022/23, about 2.3% of GDP. The Red Sea crisis has reportedly triggered a 40% drop in Suez Canal revenues. The war in Ukraine has exacerbated the trend of increasing distances for maritime cargo, particularly for the oil and grain trades. Impacts on freight rates have varied across market segments, with container shipping handling consumer and manufactured goods facing the sharpest increases. Practically no LNG carrying vessels are currently using the Suez Canal, causing a spike in gas prices. Average container shipping spot rates from Shanghai in early February 2024 more than doubled. The rates from Shanghai to Europe more than tripled, jumping by 256%. Supply chain planners, what actions are you taking? (Photo of me on the Panama Canal's Mira Flores locks as they open) #panamacanal #suezcanal

Trouble at the Canals: Suez Canal Houthi rebels have been attacking ships in the Red Sea, a major issue for the shipping industry. Egypt generates $9bn of toll revenue per annum, but more importantly it represents 25% of global seaborne trade. Initially the attacks were focused on ships controlled by Israeli owners, however, recently all ships heading to the canal are in harms way. Militarized attacks and hijacking is causing shippers (i.e. Maersk, MSC and COSCO) to re-route or delay shipments. The SCFI (Shanghai Containerized Freight Index) has increased 10% since mid-November when the attacks began in earnest, but if this continues rate may go up 100%, representing a doubling of current prices, while insurance premiums soar. Containers coming from Asia and tankers loaded in the Middle East (oil, gas, diesel) enroute to Europe are impacted. Russia’s seaborne crude transits the Suez on the way to India and China. 25% of Qatar’s LNG is destined for Europe, and the Suez is a critical link. Panama Canal Due to the drought in Panama, the number of ships that transit the canal has decreased from 40 per day to 20, due to lack of rain and low water volume. This results in larger ships carrying less of a load factor to not weigh down the vessel. One would think that Panama can take in sea water, however given the topography of Panama, civil engineers did not solve this in design, since sea level is 85 feet lower than the passage thru the canal (that’s why it is a locked system). The Panama Port Authority now auctions off available slots, when available at $4mm each for a single trip vs $150k for the same trip thru the Panama Canal earlier this summer. Investing in the shipping sector has never been trickier than in recent times. Beginning with COVID and the lack of labor to support trade, the initial collapse in energy prices were followed by huge demand for container ships and now this. From wars to droughts, our canals find themselves in troubled waters. This volatility and new decarbonization regulations have created opportunity to invest in this sector for those of us who have a dedicated maritime team.

UK to EU D2C shipping is about to get materially more expensive – are you underestimating the impact (€3 per HS code)? From 1 July 2026, the EU will introduce an interim customs charge of €3 on low-value shipments under €150 that currently pass duty-free into the EU. This is a material shift for UK fashion and beauty brands with high SKU counts per order, where multi-item baskets mean customs costs can quickly compound — think 9 SKUs × €3 = €27 per order, before carrier or fulfilment costs are even considered. Key points UK retailers should factor now into 2026 planning: 1. €3 customs charge per HS code (item) from 1 July 2026 (this is ahead of the full removal of the €150 low-value relief in 2028) 2. Additional handling fees expected from November 2026 (c. €2 per shipment) Some EU countries are already moving faster: Italy: €2 handling fee from 1 January 2026 Romania: €5 handling fee from 1 January 2026 Others likely to follow include France, Netherlands, Belgium and Luxembourg This isn’t theoretical. In conversations just this morning with a large UK brand, US tariffs have already hit cost and sales — and EU customs changes are now accelerating parallel discussions around both US and EU distribution centres. If you haven’t already accelerated EU localisation decisions, this should now be a priority. What is coming up in conversations with UK brands right now: 1. The true cost-to-serve delta between UK cross-border shipping vs EU-based inventory 2. How EU-based fulfilment (including THG Fulfil's Poland DC) can materially reduce exposure to per-item customs charges 3. The trade-off between inbound bulk duty vs escalating per-order fees 4. How localisation protects margin, delivery promise and CX as the customs landscape tightens through 2026–2028. If Europe is a growth market for your brand, now is the time to stress-test your fulfilment and customs strategy. #EcommerceLogistics #Fulfilment #SupplyChainStrategy #CrossBorderEcommerce #CostToServe #Customs #UKtoEU THG Ingenuity

The Port War Begins on October 14 It’s happening. Starting October 14, the United States will enforce new port fees targeting vessels built in or operated from China. Shipping companies must now make advance payments through a U.S. Treasury portal... or risk being denied unloading. Three surcharge levels have been set: • $50–80 per net ton for ships owned or operated by Chinese entities • $18–23 per ton (or $120–154 per container) for ships built in China • $14 per ton for non-U.S. vehicle carriers Some targeted exemptions apply — for U.S. vessels, small units, and LNG carriers.The impact is already massive: according to a study by Alphaliner, COSCO and its subsidiary OOCL could face over $1.5 billion in fees in 2026, out of an estimated $3.2 billion for the ten largest carriers. Beijing has announced symbolic countermeasures, authorizing equivalent fees on U.S. ships. But since there are few U.S.-built ships around, American exposure on Chinese sea routes is limited. In the end, the Chinese countermeasures remain largely a gesture : a way to save face rather than to rebalance trade flows. Meanwhile, the new rules are already reshaping global logistics strategies. Several non-Chinese carriers (MSC, CMA CGM, ONE, ZIM) are withdrawing China-built or China-financed vessels from U.S. routes. Hong Kong-based Seaspan has even relocated its headquarters to Singapore. Beyond the immediate market shock, the rise of workaround strategies (reflagging vessels, shifting ownership structures, or relocating corporate entities) signals a deeper trend: the fragmentation of global maritime governance. As companies navigate between competing regulatory spheres, the traditional notion of a unified, rules-based trade order is quickly giving way to a more transactional world. In practice, this means that the “grey zone” in global trade is growing. The port war may just be one front in a much larger reordering of globalization.

Shipping Market Disruption from Chinese Vessel Fees 🚢 The shipping industry is experiencing major disruption as carriers scramble to avoid substantial new USTR port fees on Chinese-linked vessels. What's Happening: The USTR implemented fees on Chinese vessels entering US ports, phased over three years with maximum impacts in 2028. Starting October 2025: 🏭 Chinese-built: $18 per net ton (rising to $33) or $120 per container (rising to $250 by 2028) 🇨🇳 Chinese-owned/operated: $50 per net ton (rising to $140 by 2028) 🚗 Foreign car carriers: $150 per CEU (Car Equivalent Unit) Policy Goals: 💰 Cost disadvantage - Operators of Chinese vessels face excess costs of $1M or more per US voyage 🎯 Fee remission - Three-year waivers for operators ordering US-built vessels 🛡️ National security - Building larger US-flag commercial fleet in case of war 📊 Results - Chinese shipbuilding market share dropped 72% to 52% in H1 2025 Market Impact: 📈 Container rates on Asia-US routes fluctuating as carriers redeploy fleets. Current Rates: 🌊 Far East to US West Coast: $2,322 per FEU (Forty-foot Equivalent Unit) 🏙️ Far East to US East Coast: $3,190 per FEU 📊 West Coast up 16–21% since late August; East Coast up 7–13% Strategic Response: ⚡ Gemini Cooperation (Maersk + Hapag-Lloyd) swapping out 60,000 TEUs across six Chinese-built vessels on their US2 service. Economic Consequences: 💵 Shipping costs up $120–$250/container 🏦 Estimated $17–$23B annual cost to US economy 📉 Export drop up to 2.1%; GDP drop up to 0.03% ⚠️ Service volatility - blank sailings, schedule shifts 🛒 Higher consumer prices from pass-through effects What It Means: ✅ Continued rate volatility as carriers optimize networks ✅ Capacity disruptions and schedule changes ✅ Smaller ports may see reduced service ✅ Average cost impact ~$200 per TEU for affected vessels The Bottom Line: 🔄 Most significant shift in US maritime policy in decades, countering China's dominance (well over 50% of global ship production). 180-day lead time gives carriers narrow window to restructure. 📋 For shippers: Plan for rate volatility and service disruptions through Q4 2025. Consider diversifying carrier partnerships and building buffer time. ❓ What are you seeing in your supply chain operations? How are you preparing? #Transportation #SupplyChain #GlobalTrade #Truckl #MaritimeIndustry

Shipping costs may set central banks adrift Shipping costs have surged since the start of the year. The Shanghai Containerized Freight Index has almost tripled since December 2023, and the trajectory is still moving higher. Prices have increased to within 25% of their peak during the supply chain shock of 2021-22 (Fig. 1). That crisis made clear the influence of supply shocks on central banks, and we should note the similar risk for policy rates a second time. Shipping costs first spiked in December 2023, linked to the Houthi rebel attacks on vessels travelling through the Red Sea to the Suez Canal. The Iranian-backed militia first targeted ships that they claimed were linked to Israel. However, the attacks have since broadened to include most ships travelling through the Red Sea following US and UK retaliatory strikes. Further, the Houthi attacks are intensifying (Fig. 2). Alternative? The Suez Canal handles 15% of total maritime trade annually. The alternative route, around Africa, is 7-10 days longer, and the additional fuel costs are estimated to be up to US$1m per vessel. Traffic through the Suez Canal is down by two-thirds since December, and traffic round the Cape of Good Hope is up nearly 100%. Air freight may be an alternative, but it costs more than 15 times as much per tonne.

🚢 Suez Canal is Back—But Will Shipping Ever Be the Same? With the Israel-Palestine ceasefire, container ships are ditching the long Cape of Good Hope detour and flooding back through the Suez Canal. This changes the game for global trade—but what’s next? 📉 Freight Rates Shake-Up – Spot rates soared 200-300% due to rerouting. Will they now stabilize, or are we in for fresh volatility? 🚢 Capacity Shock – Suez handles 12% of global trade. With ships back on shorter routes, will an oversupply drive rates down? ⏳ Transit Time Reset – Asia-Europe shipping drops to 24-30 days, down from 45+ days via Africa. A relief for just-in-time supply chains. 💰 Cost vs. Risk – Bypassing Africa saves carriers $2M+ per round trip, but geopolitical risks remain. How do you see this playing out for contract rates, carrier strategies, and supply chains? Drop your insights in the comments! #Shipping #SuezCanal #SupplyChain #GlobalTrade #Logistics