Shipping Delays Imminent Due to Red Sea Attacks and Low Water in Panama Canal

Multiple news outlets are reporting on growing supply chain implications due to attacks and violent activity in the Red Sea. Among those impacted, the U.K. Maritime Trade Association reported that a vessel outside of Mokha, Yemen, “experienced an explosion on its port side” and another vessel fired warning shots at an approaching boat with armed individuals on board. U.S. officials told Reuters reporters that the M/V Swan Atlantic, a chemical and oil products tanker, has been attached in the southern Red Sea by projectiles from Houthi territory.

To avoid more potential attacks, ships are being rerouted from the Suez Canal around the Cape of Good Hope at the southern end of Africa, adding extended time to already long shipping routes. In the western hemisphere, the Panama Canal has already had to restrict travel due to low water levels that won't allow larger ships to pass. 

While experts don’t expect to see as much supply chain disruption as was experienced in 2020 during the height of the Covid-19 pandemic globally, there could be significant delays for cargo shipments worldwide and manufacturers and suppliers may find themselves paying rising freight costs to their global shipping partners.