Panama Canal Backlog Could Cause Trade Disruptions

An ag economist says drought conditions have caused some shipping delays along the Panama Canal.

Allendale’s Greg McBride says the agriculture industry is watching the situation closely. “If we are struggling to get product moved through this area, this could be a reason to see some higher prices,” he said. “It also could be a reason to potentially see some lost exports to competition like Brazil.”

The Panama Canal Authority says drought restrictions are in place with more than 100 ships awaiting transit on both sides of the Canal.

McBride says the U.S. is considered the Canal’s biggest user for ag shipments. “This is a big problem for global shipping,” he said. “About 40% of global shipments run through the Panama Canal.”

Officials say transits through the Neopanamax locks have maintained their regular average and have not been impacted by the restrictions.  

EDITOR’S TAKE:

People are also keeping a close eye on shipping conditions along the Mississippi River. Drought conditions earlier this year have raised concerns that there could be shipping slow downs or restrictions on that waterway this fall. Couple that with the issues impacting the Panama Canal and we could be in a very precarious position as it pertains to movement of goods to the Gulf of Mexico and beyond or bringing supplies upstream as well. Either one or both of these events can be disastrous for U.S. farmers/ranchers. Our fingers are crossed that we do not have the perfect storm when it comes to shipping grain this fall.