• The severe drought that hit the Panama Canal reduced its capacity considerably in the first half of 2020.
• With the onset of the rainy season, the situation has improved, allowing fully-loaded larger vessels to pass again.
• The Panama Canal authorities have increased the tolls for larger vessels, which might affect ocean freight rates.
• Furniture importers and exporters got affected due to unpredictability in shipping schedules and overall shipping costs.
• Logistics service providers may have to find alternate routes or modes of shipment if the toll rates continue to rise.

A Sigh of Relief for the Shipping Industries

The Impact of Drought on Panama Canal Operations

For the first half of 2020, the Panama Canal, an essential vein for world trade, came across a severe drought that noticeably reduced its capacity. It primarily affected larger vessels loaded with everything from grain to furniture.

The Change in Season and its effects

The arrival of the rainy season thankfully dispersed the clouds of concern, enhancing the canal’s capacity. This natural solution, accompanied by the strenuous work of canal authorities, means larger, fully-loaded vessels can once again smoothly sail across the canal.

Monetary Facts: Affecting the Ocean Rates and Furniture Trade

However, these improvements come with a cost. The Panama Canal authorities have increased tolls for larger vessels, which is most likely to impact ocean freight rates. These higher costs, if passed onto consumers, are expected to resonate specifically with furniture importers and exporters. With already unpredictable shipping schedules, unpredictable costs could potentially add to their woes.

In conclusion, while the Panamanian drought’s impact is diminishing, the long-term effect on global ocean freight rates might be significant, especially for industries like furniture that rely heavily on shipping for imports and exports. To combat the possible increase in toll rates, logistics service providers might need to reassess their plans and look for alternative shipping routes or modes for more cost-effective solutions. The coming months will show how these changes will play out in the world of shipping and the global trade of goods.

originial article https://www.furnituretoday.com/?p=316714

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