Two of the world’s most important international shipping route connections are being disrupted simultaneously: the Panama Canal and the Suez Canal. When one important international shipping hub experiences disruption, the effects tend to ripple across the oceans to supply chains around the world. When disruption happens at more than one major shipping focal point, those ripples turn into waves, and the negative effects on supply chains can grow exponentially rather than just multiply.

We’ve previously covered drought in Panama causing the restrictions on the size and number of ships that can traverse the Panama Canal. The situation is ongoing, causing shippers and carriers to reroute cargo and vessels to avoid the bottleneck. In fact, just today Supply Chain Brain posted a Bloomberg article about a diesel ship sailing down and around the southern tip of South America instead of waiting to get through the Panama Canal.

More commonly when there is disruption at the Panama Canal, carriers and shippers reroute goods in a way that includes the Suez Canal. That is particularly the case when talking about cargo from Asia to the U.S. East Coast or vice versa. Imagine goods normally shipped from Asia across the Pacific Ocean, through the Panama Canal, and to ports at the Atlantic Ocean or the Gulf of Mexico. If the Panama Canal connection needed to be avoided, carriers and shippers could do something like the following:

Let’s say the cargo starts around the South China Sea. It’s sailed over to the Arabian Sea, into the Gulf of Aden, and through the Red Sea, which takes it to the Suez Canal. The cargo ship comes out of the Suez Canal into the Mediterranean Sea, through the Strait of Gibraltar, and into the Atlantic Ocean. Without the Suez Canal, ships would have to instead sail all the way down and around Africa.

But that brings us to the problems over at the Suez Canal….

Find out all about them by reading the full post in Universal Cargo’s blog.