According to the recently released Drewry's Reefer Shipping report, Transit restrictions in the drought-affected Panama Canal are beginning to affect the capacity of vessels servicing exports of perishable products from the west coast of South America.
A convergence of factors, ranging from climate impacts on key fruit crops to weak Chinese demand and geopolitical tensions, have affected the short-term outlook, with total maritime refrigerated cargoes forecast to decline by 0.5% year-on-year by 2023. According to the report, this will follow last year's 0.8% contraction and represent two consecutive years of decline in this market.
Fruit exports decrease
Across the fruit sector, there has been a notable downward trend in exports from almost all major producing regions, as the effects of El Niño have amplified weather phenomena. The shortage of quality products has led to drops in exports of deciduous fruit, exotic fruit, melons, and berries. Banana trade has also faced difficult operating conditions, with rising cost pressures and weak demand resulting in a drop in maritime exports this year.
The situation in the Panama Canal forces detours
However, the most worrying situation now is the situation with the Panama Canal, where transits and drafts have been considerably reduced due to the lack of rain, which in October was the lowest since 1950. There are now 24 transit shifts per day and they will be gradually reduced to 18 by February 1, 2024.
For shipping lines with reserved spaces, it will mean less cargo capacity and the need to maintain strict itineraries to manage spaces, which means they run the risk of leaving cargo in Chile, Peru, and Ecuador, depending on the situation.
Charter or seasonal services, such as those performed by specialized reefer vessel operators that do not have reserved transits, will be forced to reroute through the Strait of Magellan or Cape Horn, resulting in higher costs and longer transit times for beneficial cargo owners (BCOs).