From Dow Jones & Company:

Houthi attacks on cargo ships in the Red Sea and drought conditions in the Panama Canal have created a “perfect storm” of disruption in global shipping, according to logistics provider OEC Group New York. The United States, Australia, Canada, and the United Kingdom have warned the Houthi rebel group against further attacks on Red Sea shipping. This has led to a warning in countries such as the US, Australia, Canada, and the UK. The Red Sea is a critical shipping lane for cargo traveling through the Suez Canal, transporting $1 trillion of goods per annum.

Drought conditions in the Panama Canal, worsened by a severe El Nino, have led to a significant impact on container ship traffic through another key trade route. The Panama Canal accounts for about 7% of global seaborne trade. The longer journey due to the temporary diversion can impact U.S. supply chains. Going round the Cape of Good Hope adds 10 days, which can cause congestion in ports. Experts suggest that “the RedSea situation is acute but not chronic in the long term for the shipping industry.”



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