Panama Canal experiences growth amid Ukraine crisis, China lockdowns, & inflation

Photo by Rikin Katyal 

6 May 2022

This week, the Panama Canal Authority (ACP), which governs the waterway, announced the continuation of its record growth. The Canal witnessed its “highest-ever shipping flows in fiscal year 2021.” During the first half of this new fiscal year, ACP reported that “new tonnage rose 0.8%, container ship tonnage rose 8.5%, and liquefied petroleum gas tonnage increased 11.1%.” However, “liquefied natural gas carrier tonnage plunged 31.1%,” which ACP attributes to mounting Western-led sanctions against Russian natural gas in response to its invasion of Ukraine. Ilya Espino de Marotta, Deputy Administrator of ACP, was quick to note that “we have seen other market segments compensating for the drop in LNG.” Marotta admitted that China’s “zero COVID strategy,” which has resulted in the lockdown of its largest port city, Shanghai, “will have near-term effects on the Canal’s volume” as well. “We don’t know what’s going to happen with the COVID situation in China,” she said, “but we think that we will feel a decline in April and maybe May. Then, after China reopens, I think there’s going to be a flood of merchandise arriving to both coasts.” “We’re also looking at inflation rates and the increase in bunker prices,” Marotta continued. “It’s very volatile. We are not sure how the consumer is going to react to this inflationary pressure and how demand is going to behave.” Marotta remains optimistic since this week’s figures show that growth has largely persisted despite these obstacles. “We are at about 70% of capacity,” she noted. “We still have room to grow [and] I’m still confident we’ll do as good as last year, if not better.”

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