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On Friday Aug. 7, the Panamanian government declared a state of emergency due to the ongoing drought. The Panama Canal, through which 5% of the world’s goods are transported, has been heavily affected by this drought.
If you think your company might also be affected by an upcoming supply shortage, we would like to provide you with the following information on the event as well as suggested actions you can take in the remaining time in order to reduce the impact for your company:
Around 1/3 of the canal passes through the Gatun Lake, which has seen waters levels drop drastically recently because of the drought. Due to this, the Panama Canal Authority announced that starting Sept. 8 it will decrease the maximum draft a ship may have in order to pass through the canal, from 39.5 feet to 39 feet. Due to recent rainfall a further reduction to 38.5 feet, which had been planned for Sept. 15, is currently not required.
Consequences for Your Supply Chain
It is thought that the change could affect around 1/5 of ships using the route. The Wall Street Journal reported that supply chain experts said the new restrictions could force shipping lines traveling from Asia to the US East and Gulf Coasts via the canal to leave some cargo behind in order to reduce their draft. Smaller customers that don’t have well-established relationships with ocean carriers could see their shipments held back, said Joel Sutherland, managing director of the Supply Chain Management Institute at the University of San Diego’s business school.
We recommend that you quickly check which of your products are generally shipped through the Panama Canal. When doing so, focus on your supply chain structure in order to prevent costly disruptions or shortages. Use the advantage of time to secure transport capacities at a lower price.
Supply Chain Risk Management
riskmethods offers an innovative service which today already helps companies like AGCO, BOSCH, Nexteer, West Pharmaceutical and also various mid-size companies visualize their supply chains. Through doing so, crisis situations can be identified in close to real-time and potentially affected supply chains are immediately recognized.
The riskmethods software solution, helps you visualize every one of your supply chains and the further course of these supply chains as well keep you informed on other crises (e.g. recent explosion in Tianjin) through an early warning system. You’ll also receive information on how to make the right decisions during the current vacation season and how to keep losses at a minimum.
For more information on our solution, customer examples and our offer please go to: www.riskmethods.net/en/panama.