Jakarta, CNBC Indonesia – Hundreds of ships stuck in traffic jams in the Panama Canal due to severe drought. This condition causes supply chains to be hampered in various countries so that the price of goods and services has the potential to increase.
The Panama Canal is like a “Short Road” that connects the two countries, namely Panama and Colombia. This canal also connects the Atlantic Ocean on the east with the Pacific Ocean on the west and crosses a narrow area in the middle of Central America.
Before it was built, ships had to sail up to 40,000 kilometers (km) if they wanted to go around the Cape of Good Hope at the tip of South America to connect the two oceans. But thanks to the panama canal, the journey can be shortened, the ship only needs to cover a distance of about 82 km.
This canal shortens the distance of thousands of kilometers, so it’s no wonder its role is very vital for global cargo traffic. According to Marine Insight, this waterway facilitates the movement of 40% of cargo ship traffic worldwide, with almost two-thirds of all canal traffic going to or leaving South America.
Unfortunately, the dry conditions due to rainfall that arrived later than usual resulted in a sufficient volume of water to open trips with a large number of ships.
This resulted in a buildup of ships on both sides of the canal. Under normal conditions, a ship crossing takes 9 hours. However, current conditions have taken longer. Several ships have even queued for the past three weeks.
According to Wall Street Journal pOn Monday (21/8/2023) there were more than 200 ships queuing to pass through the canal. Previously, the panama canal authority also warned that there would be a reduction in the number of crossings from 36 ships to 32 ships.
Photo: (AP/Arnulfo Franco)
The Panama Canal in America is reportedly drying up. This affects export-import ships that want to pass through the world’s important transportation and logistics routes. (AP/Arnulfo Franco)
As a result of this, some ships have chosen to change their travel routes and some have even been forced to carry 40% less cargo than usual to prevent the water level from falling.
Antonio Dominguez, managing director of shipping company Maersk, which is by far the canal’s biggest user, stated that he was worried that a prolonged drought could lead to delays and increase shipping costs, affecting Christmas merchandise as well as other consumer goods and making things more expensive. .
The administrator of the Panama Canal, Ricaurte Vasquez Morales, also said that restrictions on crossing vessels could last until the end of the year. As a result, the lost revenue can be estimated at US$ 200 million.
Most of the ships stuck in traffic jams are bulk cargo ships carrying fuel, so the direct impact is starting to be seen in rising commodity prices.
One of them, the price of ICE Newscastle’s coal over the past month to Friday (25/8/2023) has jumped more than 10% to the position of US$ 156 per ton.
Especially at this time the tendency of countries with four seasons is supplying more energy to prepare for winter towards the end of next year.
Not only that, the impact is also felt on countries that export and import to the US. One of the largest is China, because this bamboo curtain country is the largest trading partner for Uncle Sam’s country.
China’s exports to the US amounted to US$ 42.31 billion last July or the equivalent of 15% of the total exports of the Panda country of origin of US$ 281.76 billion. Overall, China’s exports – imports have experienced a downward trend since the first half of 2021.
Turning to other countries affected by the traffic jams in the Panama Canal are Japan and China. Sakura Country’s exports are mostly the US with a portion reaching 18% or JYP 1.79 trillion.
According to data from the Japanese Ministry of Finance, exports in July 2023 reached JYP 8724.97 billion, a decrease in value from the previous month of JPY 8743.84 billion.
The exports of the two countries, which are still dependent on the US, while the current condition is hampered by the traffic jam on the Panama Canal, means that the export shrinkage can still take place within a few months.
When exports can still be reduced, this will also have an impact on the country’s trade, because when exports fall, productivity will decrease which will lead to weak demand for imports.
The impact on RI can affect exports because these two countries are the largest export destination countries. As a result, the trade balance could shrink again, causing financial markets to go into turmoil again.
For information, Indonesia’s trade balance still recorded a surplus of US$ 1.31 billion. However, this surplus decreased compared to the previous month of US$ 3.45 billion.
The Central Statistics Agency (BPS) noted that the export value to the United States was corrected by 22.12% in January-June 2023, in contrast to growing 26.5% in the first half of 2022. Exports to Japan contracted by 11.7%, the best compared to a 45% increase in the first half of 2022.
CNBC INDONESIA RESEARCH
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2023-08-25 06:10:00
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