Currently transit through the Suez Canal is severely restricted as a result of hostilities around the Bab al-Mandab Strait and the severe drought reducing the rate of passage through the Panama Canal.

According to a Bank of America, Global Research Report the duration of restraint to passage will impact U.S. food producers and exporters.  Tyson Foods Inc., Hormel Foods and Pilgrim’s Pride among others will experience difficulties and increased costs to ship to markets in Asia.  Producers in Latin America including JBS and Minerva will also be impacted.

Supply chains have been disrupted by events in the Red Sea requiring diversion of vessels out and in-bound from Europe to Asia to pass around the Cape of Good Hope. This adds up to 20 days to a Europe-Asia voyage and incurs an incremental freight cost of upwards of $1 million for a large container vessel or bulk Pthe rate anamax carrier.

It is anticipated that the financial impact of disruption in shipping will become apparent in the results of companies during the first quarter of calendar 2024. Shipping experts are suggesting that the problems in both canals will not be resolved before midyear.