Global trade at risk as Suez Canal transit limits tighten

Since December, the number of serviced vessels has dwindled to 22 a day. The canal's transit capacity is being intentionally limited due to low local water levels. The Panama Canal Administrator forecasts further reductions in the upcoming year. Concurrently, another mishap occurred during the crossing.

The Panama Canal Administrator made a decision to bureaucratically limit the capacity of this pivotal maritime route that links the Pacific with the Atlantic. This decision could pose severe repercussions to the global network of trade relations, interrupting the flow of goods and services worldwide.

This decision, which took effect on December 1, reduced the daily number of serviced vessels to 22. This is a component of a broader strategy to restrict the canal's transit capacity, a measure directly linked to low local water levels. The Panama Canal Administrator expects additional reductions next year. From January, the permitted number of ships will fall to 20, and in February it will decrease to 18.

Meanwhile, at the start of the year, as many as 36 ships used the canal every day. In 2022, an average of 1,084 ships crossed this strategic isthmus each month. This illustrates the vital role this maritime route plays in global trade and the serious implications its restrictions can pose.

The choice to limit the Panama Canal's capacity may seem reasonable from the perspective of the administering body, tasked with maintaining the state of infrastructure and natural resources. However, for the international trade network, it could lead to notable disruptions. We can anticipate that this will impact the prices of goods, delivery deadlines, and overall dynamics of international trade.

The Singapore-flagged container ship One Orpheus collided with a floating bridge in the Suez Canal's eastern lane on Wednesday. Traffic in this waterway was unaffected, according to the Suez Canal Authority (SCA).

The crew of the container ship, journeying from Singapore to the Netherlands, reported in a statement, a steering malfunction resulted in collision with a floating bridge in the middle section of the canal's eastern lane. Tugboats swiftly traveled to the aid of the impaired vessel.

The Suez Canal, a waterway for 15 percent of global trade, is one of the most widely used shipping routes globally and a major revenue source for Egypt.

Currently, efforts are underway to widen the single-lane, southern section of the canal following the grounding of the giant container ship Ever Given in 2021, which held up shipping traffic for six arduous days.