It would be tempting to look at both of these issues and think, "Things will get better soon."
And in some ways, they will. "The industry is going to find medium- to short-term solutions against these particular obstacles," Nikos Nomikos, a professor of shipping finance and risk management at Bayes Business School in London, told me.
Take the Panama Canal problem: The cuts are, canal officials repeatedly say, a responsible adaptation to a particularly bad year. Droughts have happened before, and the weather phenomenon El Niño is exacerbating droughts throughout the Americas, with devastating consequences.
But this isn't just a bad year. There are systemic issues at play with no quick answers. Climate change is worsening extreme weather events around the world, including droughts.
And that's running up against another competing need. As Dulcidio De La Guardia, a director at the Morgan & Morgan Group in Panama, told the Latin American Advisor in February, "The lakes that provide water to the Canal are the same ones used to supply drinking water to the major cities of the country."
"And water consumption has increased more rapidly than forecasted due to population growth, and poor management, waste, inefficiencies and corruption at the state-owned water company," he said. There are potential solutions, but no easy or immediate ones.
And then in the Red Sea: While the Houthis might temporarily halt or reduce their attacks if a ceasefire between Israel and Hamas comes through, there's no guarantee that they'll stop altogether.
That's because, as one Yemen analyst told my colleague Josh Keating, the attacks serve a lot of the group's other aims, allowing them to "disrupt economic activity, extract political concessions, and bolster their standing." Having achieved that, they show no signs of backing down, even in the face of Western military strikes.
Moreover, this is part of a broader trend of increased geopolitical instability, all of which can impact — and increasingly is impacting — global shipping. See also: Russia blocking Ukrainian grain from transiting the Black Sea at times during that war, fears about how a war over Taiwan will affect the global economy, and more.
What's happening in the Red Sea, in other words, is symptomatic of something fundamental.
The "principle of freedom of navigation is being challenged here," Rahul Kapoor, the head of shipping analytics & research at S&P Global Commodity Insights, told Bloomberg in December about the Houthis' attacks.
I'm not trying to be alarmist. Global shipping is a "resilient industry," Nomikos told me.
But countries' militaries and international shipping companies alike are thinking and planning for more maritime disruptions.
Customers, unfortunately, should too.
Any disruption's net result "will be an increase in the freight cost, either because you have more fuel consumption and longer transit times, or because you require a premium to compensate you for the risks that you face," Nomikos said.
—Caroline Houck, senior editor of news
