The Panama Canal backlog — should you be concerned?
The large vessels, thought to be carrying millions of dollars worth of goods, are locked in a traffic jam with some waiting for weeks to cross

LOCAL logistic managers are showing little to no concern about the prolonged drought in the Panama Canal, which has led to restrictions on daily transits and a backlog of ships waiting for passage. But custom brokers and freight forwarders are keener on global operations.

"It is an open secret that currently we're experiencing delays. There are vessels that were expected in August that we're still awaiting," the public relations chairman for the customs brokers and freight forwarders, Javar Wilson, told the Jamaica Observer.

The backlog of ships had eased to 117 on Friday from a peak of more than 160 vessels in early August, but the wait time jumped to between 44 per cent and 59 per cent last month, according to Reuters. The most recent news coming from the major transhipment hub is that ships are now paying close to US$3 million to skip the queue, in addition to a standard transit fee of around US$400,000.

While ships are trying to get through and some are changing routes to meet their deadline, local car dealers have expressed differing experiences with the chaos. ATL Automotive Group responded, saying they are currently unaffected by the backlog at the Panama Canal, while Toyota Jamaica expressed that they were not aware of any challenges. But at least one private car dealer said otherwise.

The number of daily transits through the canal has been capped at 32 by water authorities in a bid to conserve water

"Dates are no longer secure; you have a date, a ship might arrive, and then you find that there are generally between a week and two weeks of delays," said Deleon Burke, owner/manager of Auto Pub Jamaica.

He expressed to the Business Observer that he has three cars pending, the arrival date has passed, and he's not sure when they will arrive. Still, he showed little concern as the delay period remained short.

The Panama Canal handles five per cent of the world's commercial shipments and is mainly used by clients from the United States, China, and Japan.

"A large percentage of our goods that are coming from Asia will pass through the canal to come to this side of the world. In fact, a lot of our motor vehicles and the vessels that they travel on are currently not coming to Jamaica or have not come from late August coming into September. We have not gotten any motor vehicle vessels simply because of the situation there with the Panama Canal," Wilson revealed to the Business Observer.

Oil ships waiting to pass through the Panama Canal

But local car dealers have expressed no such challenges to the Business Observer when asked. They were either "unaware" or "unaffected" at the moment. But according to Wilson, goods coming out of Asia and Europe are still not here, and freight forwarders are becoming disgruntled with the continued delays.

"We are hopeful that in the coming weeks, things will come back to normal," he added.

The idea or notion that logistic players are unaware, he says, would be unlikely as "international logistic partners have sent out notification that says there are great delays and it's known worldwide, major logistic players are fully aware."

As it stands, any cargo coming by sea in large containers and some of the large industries locally may be affected.

Cargo containers at the Kingston Wharf Limited

"There are other routes that these vessels can take, which I'm certain they are looking at to see how they can get their goods into Jamaica. It may be at a higher cost and with a longer transit time, but I'm sure that they are looking at alternatives based on what is happening," Wilson added optimistically.

Already, recommendations are being made for vessel owners to reserve slots ahead of time to avoid delays.

As the Christmas season draws nearer, it could also result in fewer options on the shelves. Kamaal Azan, general manager at Azan Supercentre, a premier spot for parents doing Christmas shopping, acknowledged the crisis at the Panama Canal but instead pointed to another pressing issue. "A few delays are fine," he said. "The problem rests at our local ports — why is our port so congested?" he asked.

For him, the real threat to his business is the lack of proper infrastructure at our ports.

"If we are to build our infrastructure to become First World and be a transhipment port based on location, why efficient companies haven't been contracted to move our ports to become first world environments?" Azan questioned.

The responses, so far, showed that the direct impact on manufacturers, retailers, and consumers appears to be minimal right now; however, the potential for broader disruption as a result of the historic drought at the Panama Canal is growing.

BY CODIE-ANN BARRETT Senior business reporter

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