The ongoing drought in Panama has increased waiting times and transit through the Panama Canal.  The shortage of water caused by a strong El Nino event has imposed restrictions on both the number of vessels and their loads creating delays and increasing the cost of bulk, liquid and container freight.  AP Moller-Maersk is now using a land bridge across Panama that adds to cost due to double handling of containers but allows a steady transit of cargo.  This expedient will facilitate shipment from Australia and New Zealand to east coast U.S. ports.

Traffic through the Suez Canal has been constrained following attacks by Houthi rebels operating from the coast of Yemen.  Despite the activity of a consortium of navies to down missiles and conduct aerial attacks on terrorist locations and installations, ship owners have elected to divert vessels around the Cape of Good Hope.  This adds approximately ten days and a million dollars per Panamax vessel from Europe to Asia.  This is reflected in increased rates with Shanghai-Europe routing now up by  $3,000 per 20-foot container in a week.  Correspondingly, rates on the route to U.S. west coast ports are now up by $4,000 per 40-foot container.

Congestion at either end of the Panama Canal has reduced transpacific crossings by at least one third.  The reduction in transit will have profound implications for Panama that derives a considerable proportion of income from the canal with losses in 2024 predicted to exceed $600 million.  A similar situation relates to the Suez Canal with reduced passage depriving Egypt of revenue at a time of considerable financial pressure that will have implications for social stability.

Ship owners have accepted that disruptions in both the Red Sea around the Bab al-Mandeb Strait and restoration of normal activity in the Panama Canal will take months.  Manufacturers are already encountering difficulties in obtaining parts from Asia especially impacting factories using just-in-time scheduling of inventory. 

Observers recognize the effect of increased freight rates that will add to inflation.  The cost of energy may increase if hostilities in the Middle East further restrict shipping.  At the present time, neither Brazil nor U.S. will encounter the problems with export from their respective ports but freight rates will result in higher landed costs for all commodities.