February 26, 2024

The Panama Canal and the Red Sea are experiencing disruptions due to drought and terrorist attacks, which is impacting global trade. Industry is facing increased shipping costs and delays as ships are rerouted around these areas, and insurers have doubled shipping war risk premiums. The disruption is causing knock-on effects for ports and is also raising fuel tanker rates for some trade routes. The U.S., China, and Japan are major users of the Panama Canal, and there are concerns about China’s increasing influence in the region. Despite current commercial conditions being relatively benign, geopolitical tensions surrounding the Panama Canal are likely to persist. As a result, the U.S. will need to further engage with Panama and Central America to counteract China’s influence and maintain political neutrality in the region. Even after the disruptions are resolved, the issue of political neutrality will continue to be a concern for the Panama Canal.

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