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hello and welcome to the program. i'm how much i'm sure. it's a major traffic jam on one of the world's most important shipping routes. hundreds of vessels are stuck waiting to pass through the panama canal. the growing backlog follows months of drought and central america, low water levels because of reduced rainfall have led to limits on the number of vessels allowed through. the panama canal was opened in 1914 and the 82 kilometer long waterway as an essential cost, cutting short cut between the atlantic and pacific oceans. the us, china, chile, and south korea are among the canals, leading customers moving thousands of tons of cargo every day. shipping companies pay around $4000000000.00 a year in transit fees. the canal is the country's main source of revenue, but restrictions have been extended for at least 10 months. that's well into the new year. so will the disruption and delays lead to higher prices in the shots, and is climate change a factor? we'll explore that and more with our guests in a moment. but 1st,

our corresponded alexander, i'm here at t, as in panama, with the panama canal, is dealing with its worst drought on record sports, seeing its administration to reduce the number of ship allowed to cross in a daily basis from an average of 3638 to just 32 and also reducing the maximum weight allowed to for a number of these shapes. why is that? it's because the canal while it connects to oceans, it actually works the using fresh watts are coming from to artificial lakes. the water level of those artificial lakes is add on historical minimum, which is forcing the canals to ask a series of questions about the future, but to deal with the credit crisis. now this will also bring a reduction in revenue for to come out at least $200000000.00 in the next fiscal year. and it's also increasing the cost of shipping. that's because some of the ships remain out of sea for many days, trying to get

a spot to add to cross others have to get rid of some of their cargo that has been moved on trucks or trains and it's picked up on the other side of the canal, all of these costs might end up then into the final price is of the product and end up being paid by the consumers. but there's also here a lot of big questions that are being asked about the viability in the future of the canals. that can, i will need to find more sources and of a water sources of water that are shared with the city of panama and its inhabitants. and to find a way to deal with these, whether phenomena, instead of becoming more frequent and more severe. the. all right, let's go ahead and bring in our guests from his office in panama city. next to the canal is lars us to guard nielsen. he's had of operations for north america, enlighten america for the giant shipping and logistics company, immersed in london is james baker. he's containers editor for the maritime

information provider and lloyd's list at in daytona beach and florida. john paul rodriguez is a professor at hofstra university in the department of global studies and geography . he's also a specialist in port logistics and shipping a warm welcome to you all and thanks so much for joining us today on inside story. lars, as we mentioned in the intro there, uh, as i understand that you are able to see at least some of the vessels that would like to enter the panama canal from outside of your office window. i, i wanna ask you, uh, where do things stand as of now uh, do we know how many ships are still trying to transit through the canal and are waiting and have wait times been improving? so yes, it is correct that i'm speaking to from panama, and i'm near the the theater water side. yeah. so, so suddenly that i'm not hung up but shifts waving and, and i would say, i don't have an up to date or accurate time right now. but, but we are talking to the canal and it is probably just above

a 100 still waiting to it's across the canal and waiting, waiting times. i've reported the for the residents that are impacted. and perhaps that's upon we should talk about dispenses, impacted by the it's reported to be around, but 10 days at the, at the, at the current point in time at large. let me also ask you how much concern is that right now when it comes to the kind of costs this will add up to, for the shipping industry and how much of an impact is that having as of now, to? so i think from a, from a container carrier perspective, it's important to understand that actually we do a, in general get access to the crossings, but the b would cry. so so therefore obviously we, we have phasing some cost in terms of the draft restrictions, which basically means we are losing and live a lot of capacity in terms of how much pack a we can carry through. but we actually not face, but significant waiting times. so it's not a major concern that the con, content time for us is on paul panama is about halfway through its rainy season right now. how unusual is what is going on right now when it comes to this drought

and, and the time that it has it in the middle of the web season. yeah, it has been, i would say an ongoing problem for a few years that people are kind of backing out. or if you were talking about their concern about a potential water shortages for year now. and actually the new locks were designed with that concern in line. but over the last i would say half a year or so it's been a rather unusual in terms of rainfall. it's probably part of a long term cycle. and eventually the it's going to be but meanwhile there is a less water and therefore less water or less capacity. james, there have been concerns about water shortages in the panama canal. in the past was the drought that is currently being experienced, expected, where there concerns. as you understand that this might happen. and would you say that there is a concern that the panama canal could be in danger of drying up completely at some point to the drive completely inside and out

a lot of times this, this is a significant impact this. yeah it's, it's by the, by, i mean, the only time that we are centrally, so whoever changes with your name here it is. yeah, that's right here. uh what kind of car on that uh yeah. i'm like let me draw it out for a long time. yes. lars, i'm going forward. what does this mean for supply chains? i mean talk about it compared to where it is now and what are the concerns of where it might be a few months from now or a year into. ringback yeah, so, so in the immediate future and that the main impact on the supply chain is that we are potentially seeing a little bit less capacity available on some of the routes that, that cause us to come out. this is being taken care on to contain

a segment in terms of actually sending additional investments that actually phrases best restrictions. so essentially using the old logs and sharpen drought continue. and i think it is important to recognize that the canal has been announcing that they do potentially expect implications for the coming uh as long as 10 months. and then of course, we will see the potentially less capacity. and what does that mean for supply chains? well it, it means that the, our customers and also provide those in the supply chain. we'll have to continue to look for, for potentially, for somebody trinetics to make sure that we keep track of growing. i think it is important to recognize that, that having profits restrictions independently come out, it is not on user per se. but more time, usually this time around is that it seems to be dragging on for, for longer than what we've seen in the past. but, but the companies like, like most and, and all those we are used to dealing with this and then have to make investments in place for how we can adjust the insects of the ship to match the available truck

through to come out and jump. all i saw you reacting to something what lars was saying there and it looked like you might want to jump in, so i'm going to give you that opportunity. yeah, thank you. yes i, i agree quite a lot when just said, but also the impact is very, i would say specific to the region and i think it will be her sweet little little annoying back to europe or europe in supply chains. just especially coming from asia board for the american supply chain that might be a different story, particularly for over let's say the trend specific routes. so with the, the, with don't do with east coast. this is where it's gonna, it's gonna have started out of an impact in terms of capacity, reliability. and eventually, you know, when you're up some capacity, you're really busy issue. you're not selling a bit more inventory corner and more in planning and, and up to, and bar incur initial cost for the importers. james, let me ask you from your vantage point, how quickly can a disruption like this to the canals operation, you know, felt being as it's rippling through the global economy. yeah, i mean,

the, to be honest and not really any. and yet they continue to try to level to get through the see the go saw when you're ready for me to shut down a christmas. the goods enough to get through the world is more likely, haven't at the moment is we get a reimbursing for some of the of the drive cars and taking which i have to get around. okay. now that's going to add the distance a lot of fuel to the praise, right? so for those democracy, the impact the container is james. let me also ask you, um, it's expected that these current restrictions will be in place of the panama canal,

for i believe it's at least 10 months. so i want to ask you, um, is that timeline from your point of view, realistic or do you think potentially could be extended or possibly even shortened? it just depends on what happens is the way the yeah, the canals i'm trying to find ways of saying go to for a long time. ever since it is new los intrinsic, same thing, class, but nothing really been done uh to try to sort of was a no, it really does come down to how much is coming into that catchment area and then just get on my side of the town. so the houses that have to get through to the end of the next race age. and we're trying to think now that we want to try to stop a blast as much as possible. so hopefully that'll be realistic. and then we'll have to see what makes drivers, and those are large when we talk about the knock on effect of all this,

it doesn't less business revenue for the canal ultimately mean higher prices for consumers and. and if so, when would that expect to be seen when, when would that impact consumers or so? so certainly, i mean, obviously i don't want to speculate on the revenue stream for the panama canal, about that. obviously one could assume that that having less crossings would result in invest revenue for the come out. and i think it's important to, to recognize the. ready the canal, the structuring, gets tired, so i would say, i don't personally expect that'd be, would be made with increasing costs from, from costume to come out anytime soon. and therefore these, for the contain a segment of the markets. and i don't foresee that this will not have any immediate, the cost implications. i think just james, the expressed, i think that it's been sort of trades of shipping. that is a more impact event. that's probably where you could see more impact entered into containerized segments. john paul,

one of the questions that is coming up right now is if at some point in the future an alternative canal could be built. another way, perhaps for ships to get from the pacific to the atlantic. now, for a long time, there has been this idea that perhaps there could be a canal built in nicaragua. it's something that's been proposed before, but it has never materialized um. is that something that you believe might be a viable option at some point going forward? at this point is very, very on likely the major factor his, the again, you have to bear in mind that the care i wrote was initially a cause some kind of a call and alternative to find out about when the whole system was been designed. in addition was making the canal in fine. i'm not because it was of much a better solution and you can run boys and what's more expensive solutions. it has its own constraints. you are dealing with actually, but for engineering much higher costs, and as a very difficult time to wrap my head around, what will be the cost and

a potential i would say revenue generation, you could get with this project. and that's actually one of the major reason while the any and the last cycle of concentration which was around 2014 it with the idea of project was essentially abandon james, what do you say uh, e, as an alternative waterway ultimately needed and is the idea of a canal being built in nicaragua at all realistic the driver now is realistic, just the basic geology of the country. so that's just for the sake of the engineer. windows lost out there to think about costs in the range of 75000000000. that struck me if it takes us a lot of we're trying to build a high speed rail and it where can they? and then you take the one line and that's costing on the inside your answer to the ground or less than that is uh slightly every listed. so um

yeah, what do we need? uh i think so. i think uh the issue is with a pad and does this from uh we do. we don't have any over here. um yeah, uh, i'm guessing like we'll re so as the to now little continued to case. so shipping. uh yeah. the, i think we got it, but i'm up to now listed under 24 ships. why say as all as of today they reduce the number of transit by the by directions. so this is all i have is canal has stopped or is about to saw. so i think, yeah, it does say some perspective on this thing. yeah. well james, let me ask you this when it comes to the ships that regularly transit through the canal, is there

a level of concern that exist right now that would cause any of these companies to try to look for alternative routes that are already available and that would be viable to them that this particular time well, i the, i mean the us east coast, right? you're coming from your turn, your goods from china to the so as not the direction. it's uh, 5 days long as you come live. so there's a lot of shipping capacity and a lot of alignment is and so much on the things that we use up some of that. a capacity this in the market, and also from various to south the southeast to ensure it's actually shorter to get us these guys biases the, the new alternatives, the sell american fringe. right? it's coming up to your cause i to rely on coming to the now there are experts who

suggest that in order to make the canal a viable in a future with more frequent, extreme weather conditions, infrastructure changes to the canals will ultimately be needed. um, i wanna get your perspective on this, how costly do you think something like that would be, how long would it take? would it be realistic as an endeavor? and so, so i'm, i'm certainly not an engineer, but i, and i think it was expressed earlier by one of my fellow colleagues some to call you. and that, you know, did come out of has been working on, on finding ways. and i know they are still working on finding ways to it, to increase the water flows into the it so to support system. and in terms of what that would cost i, i simply don't know, but kind of think it also to james's point. it is important that we understand the traits that being supported by the canal and that they are. and so that's it. so. so not only can we say to enter the us east coast that as gains express to the source. and we also have the ability to which move cargo via the us bicycle on

the land option across the us, which is also something that is so used by certain their customers across the us. so there are ways and also then been simply saving through the canals that that is being used on that certainly could be an alternative is this would be an issue we have to face off for us to call john paul. one of the things that was discuss a lot during the pandemic was how cobit 19 was impacting supply lines. i want to ask you compared to what was going on, then how will this bottleneck impact shippers compared to how much coat with 19 impacted the supply chain and, and what about also the suez canal blockage that occurred in 2021? i mean, when you look at what's happening now compared to what happened during the pandemic, and compared to what happened when there was the suez canal block is, where are we at as a team there come, it's not comparable. cole head was systematic across the world. i'm going to start with a multi pacific of effect, locked down, change of consumer bad patterns,

and so on, so forth on it is predictability. depend on like an all situation is again, a capacity issue, which is manager born and predictable. you know what's happening. you have the schedules, you have the with a number of crossing for days. so that's i would say, and one admin we're waiting on comparable, but it's long term. so it has an impact on shipping. now you're gonna start to maybe we assess the situation. major importers and exporters, i'm going to maybe change their, their, their routing possibly. but comparing to swift, swift was 61 we blockage, which was very unpredictable. and that's what it was on clogged the situation returned to normal ret, giving you quickly. so again, we get stuck comparable, and you're getting, you're getting hit with something which is i would say on the radar screen, we have very, i would say we're going to be well known timeframe while cold is and that's a, this was gonna look edwards rat to be random in system that take advantage of all. also let me ask you have the congestion that had been caused by the pandemic when it comes to supply chains. i had a large, we ease before this,

panama canal bottleneck. i mean, with things essentially back to normal when it came to global supply chains and the shipping industry. as far as i can tell. yeah. for that background, full circle, the shipping rates were down. so essentially, almost back to pre pandemic level. and i guess we were facing a situation over capacity so that that fact we should have current content. that's why don't that there's not that much concern consecutive a video ship this uh wrapped in the over a coming time from a handful capacity. lars, i saw your reacting just now and it looks like you also want to jump in, so please go ahead. that. yes please. no, because i think it's a, it's a very relevant point. and not only is it relevant to understand that things are essentially back to, to, to pre point they make in terms of congestion having east. i think the other point that that is very relevant is actually did learning that a lot of the industry players and, and the, the customers off the supply chain. so to the people we have serving have actually learned during de, depends they make and that is to have redundancy and use supply chains and having

a ton of tips. and it's one of the things that we're finding now that we're able to offer and turn it through browsing. so unlike a pre call it, and a lot of our customers would have basically one option to move cargo from from one part of the world to another. and what has happened is a lot of our customers have found it needs to happen, turn a tips and actually something like the crime or challenges we're facing is actually showing that that this is very valuable because now we can move cargo by a different means as i mentioned we could move it on rail across the u. s. for instance, i'll say intro to suicide. so, so i think we, we have likes to learn something to defend democrats now, actually helping us to amendments this situation. again, that is how you also react in just data with large was saying, did you want to jump into? i was just the one thing. so in the service is not always is a very rare reversing battery. so i'm not entirely sure that we're just coming through the service here down south. okay. but and back out through the magic that

we're going to the just to the elastic us i just as long as i get it yeah, shifts very movable and supply chains. now or if you want to get somebody to meet with us, it's as easy to bring it in for. yeah. even up to canada, went to los angeles long base and then ro truck through where you want me to be as it is furniture pieces. uh, sorry for the size and truck from there. so there should executive shipping the container supply chains large. you know, we talked about where things are now compared to where they were in the shipping industry, in global supply chains during the cold and 19 pandemic. we also talked about how, what's happening and how it compares to the blockage and the see what's going on. but i want to ask you when it comes to, what are the concerns about climate change and how that could impact, you know,

supply chains and shipping routes going for? no, i think. and i think by this point in time, but we do have enough evidence that, that it's clear that as an industry is there. yeah, i'm talking on, on the shipping industry, but also logistics of costs that the needs of the colonizing i'll operations is very clear. and, and i think it's, it's very important that, that we are a cost industry. we take this very chairs and put some very concrete measures in place. and they also don't have initiatives across the industry to, to try and address this. as an example. we are having our 1st confidential container isn't actually the, the bumper today in front of them, and then she's on her way far 1st part starting next month. so the industry is taking steps. this is a long term and demo, but it's very important that the industry and all of us across the industry realizes that this is something that we don't have to take very serious and invest and develop across the distribution example. let me also ask you, i mean i'm a,

how much is the climate change a factor and all this? how much concern is, is this causing right now? this a subject which is i would say, can puzzle me a lot because i can, it's very difficult to assess the again, the expand of the impact of climate change. but what i find the most you could say damaging, is not the dam back of the time. it changes their reaction. people are changing supply chain and we thought would be couple nights they should sounds great. but also a may involve a significant higher price energy prices and also a short digits. so that, that they might open, you know, again there's a risk of everything to kind of trans fair enough. but my biggest concern and fear is how the policy maker and government then also the carriers and among others, are going to react and react to this. and embrace strategies i've made come to be very on sustainable and excessively damaging to the welfare of the population. james, let me ask you how much

a concern is there right now about the potential for broader disruptions going forward? this is something that everybody is concerned about is really you know, wait, wait the vehicle. i mean the car is having a major, major, fantastic. you know, one of the things that, you know, with the job of taking infrastructure. yeah. another, so what happens to all since the increased storms? right. they say they're also on the levels, particularly low bandwidth, but so far, causation, kicking off of the way, i think now with intimate ration alone, making shipping itself more challenging. so i think the jury is still out and we want to have the directions and try it. out at large if shipping becomes much more challenging as you know, whether it's due to climate change or,

or other factors. um, how much more difficult does that make things for the global economy? i mean, i know right now there's not a huge level of concern about what's going on when it comes to the panel today. but going forward, if we're talking worst case scenarios, how, how dire could things get for the global economy? but i think we can look back at the last, the 2 or 3 years from depend demik, we have cost, we saw i may just shift in, in supply and demand. and then we saw what that fits to, to what the cost of logistics and global markets and how they've been, what's a factor? obviously, it's not the only factor, but a factor potentially in an inflationary pressures. but then as a knock on effect on how you, how you conduct your policies, your monetary policies, etc, etc. so certainly it could be effective, but i'd have to say at the current point in time and with the actions that are being taken. i still think that's the scenario that perhaps that is hopefully filed

in the future on something that we will never get to. all right, well we have run out of time, so we're going to have to leave the conversation there. thanks so much to all our guest lars, us to god nelson, james baker and john paul roderick. and thank you for watching. you can see the program again any time by visiting our website builders. here we're not. com and for further discussion, go to our facebook page. that's facebook dot com, forward slash ag inside storage. you can also during the conversation on x, i handle is as a j inside story for him having him driven the whole team here, bye for now the the

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