Rival trade routes benefit as Panama Canal traffic declines | Global News

The world’s busiest shipping lanes are facing challenges as the new year begins. Houthi rebels have been attacking vessels passing through the Bab al-Mandab Strait, causing trade volumes through the Suez Canal to drop by 40%. Ships are diverting around southern Africa, leading to a 30% decrease in trade through the Panama Canal.

While the issues in the Suez are geopolitical, Panama is facing climatic challenges. The lakes that feed the canal are drying up due to annual droughts, potentially impacting the ability of the canal to accommodate large container ships. This has prompted other Latin American governments to consider infrastructure projects that could divert traffic and revenue away from Panama.

Mexico’s Interoceanic Corridor (CIIT) is nearing completion, with plans to modernize a 300km railway connecting the Pacific and Atlantic coasts. Colombia is also exploring a railway project through the province of Chocó, while the Capricorn Bioceanic Corridor offers a highway route through multiple countries in South America.

Despite the potential for new land routes to complement the Panama Canal, challenges remain. Niels Rasmussen, chief shipping analyst at Bimco, highlights the logistical hurdles of unloading and reloading cargo for land transport. However, in times of crisis such as tensions in the Middle East or drought in Panama, imperfect land routes may be better than no alternative at all.

As global trade continues to evolve, the development of new land routes could offer opportunities for regional trade growth and supply chain diversification. The shifting landscape of maritime trade underscores the importance of exploring alternative routes to ensure the resilience of global shipping networks.