Global Shipping Issues Return

Ocean container shipping was a key theme of the economic disruption experienced during the COVID pandemic. The sky-high costs and lack of availability contributed to higher crop protection costs and limited availability in 2021 and 2022. 

Thankfully, this pressure eased significantly over the back half of 2022 and into 2023. But just as we began to enjoy the return to pre-covid conditions, new challenges are once again elevating costs and reducing reliability. The challenges include security risks in the critical Red Sea/Suez Canal corridor, capacity constraints in the Panama Canal and higher fuel costs due to global regulations requiring the use of higher grade (lower emission) fuels. The challenges have seen the Drewry World Container Index increase by 61% in early January. The Price Index now sits 88% higher than pre-covid rates. As ships need to divert to longer routes to avoid the Suez and Panama chokepoints many industries may face delays going into 2024. 

These challenges highlight the need to have diversified manufacturing assets and good contingency plans in place. The hard lessons learned during the Pandemic should serve the CP industry well as we navigate these unsettled waters.