Editor’s Note: First, let us say that the humanitarian impacts and terrifying possibilities of a raging geopolitical storm leading to a global conflict are what really matter when eyeing Gaza. That is a concern well beyond this blog! We write this in the spirit of the annual budgets we are preparing (or will soon be preparing), and our businesses. 

What the heck are we international shippers all going to do when the Suez Canal is blocked or compromised by the current and broadening conflicts in Gaza, Israel, and beyond? 

Let’s start this tirade in Panama—the slightly more famous canal among the proud Americans who financed that impressive project back in 1914. Yikes! First, the Panama Canal Authority (PCA) lowered the maximum (max) draft levels from 50 to 44 feet, which limits max vessel sizes. Since then, the PCA has already reduced the number of vessel transits per day from 36 to 32 (in July) to 24 (in November), followed by an announcement that the daily max will drop to 18 by February 2024! 

Hey, no problem, we’ll just pay a few dollars more to wait a few days longer for Suez routings, right? …Right? …Maybe wrong. 

Here are a few fun facts to help put things into perspective for us: 

  • Philadelphia is farther from Washington DC than the Gaza Strip is from the Suez Canal. 
  • 130 slender miles separate the infamous Refah border crossing in Egypt’s Sinai and the busiest and eldest major canal on planet Earth. 
  • Al-Arish Airport, the primary hub for humanitarian shipments for Gaza is 28 miles from the Refah border, separating the Gaza Strip from Egypt. 
  • The Suez is not only 45 years older, but also 244% busier than our darling Panama Canal! 
  • Remember, both sides of the noble Suez sit on Egyptian soil. 

Sinai Peninusla (Egypt)

So, we are all in trouble obviously! Have you considered a world where Iran, Egypt, and Saudi Arabia gang up on Israel, and the Suez is closed indefinitely?  

Not so fast, reactionary readers. You don’t want to be “Egypted” off when seeking your supply chain information! 

Before we delve into the current situation, let’s briefly review a few of the region’s defining moments over the past century that helped shape the present political context at hand:

Enter Egypt

Today, it is said that the official position of Egypt is negative toward Hamas because they are literally the offspring of the Muslim Brotherhood. This organization has done much harm to Egypt in the eyes of many after what’s amounted to nine years of military rule under Abdel Fattah el-Sisi. That said, there is tremendous popular support for Hamas among the people—and most Egyptians would not like to see Palestinians, perhaps even members of Hamas, suffer. 

Egypt is also closely allied with both the United States and Israel, and these connections run deep and wide, as they pertain to financial aid and developmental support for Egypt. A telling example of this cooperation is the ongoing blockade of vessels to and from the Gaza Strip. And, frankly speaking, the Suez Canal is a huge economic contributor for Egypt. It is very hard to imagine Egypt attacking Israel any time soon. They now have many ties that bind, and Hamas is hardly seen as saintly in the eyes of Egypt. 

What happens if Iran or her many “seedlings” like Hezbollah take aim at the Suez?  

The short-term consequence—especially if Panama is as dry as a desert—is that we all get to know (and love) the Cape of Good Hope around South Africa. Our freight prices will increase by 100% and our transits will extend by as much as 50%, but we’ll still be in business. As of today, that seems like the worst-case shipping scenario; though, if we get there, the world is in CONTAINERLOADS of trouble. 

What’s Shapiro’s outlook on the matter?  

We feel that it’s likely that some Panama Canal business would start to move by rail from Cristobal to Balboa if the Suez is blocked and rendered useless. Our bet is it is a 1% chance. However, if it comes to that reality, just know that Panama’s rail connections from the Pacific to the Atlantic have never been faster, more reliable, or more affordable than today. By hook and by crook, even if we must use western Mexico, we’ll be routing freight to every single boy and girl in the US.  

Again, our point is not to diminish the anguish occurring in the Middle East. An unprovoked attack followed by even more human suffering: it is impossible to label this anything but a tragedy. But it would be foolish not to consider potential dire developments. Shifting our focus to commerce, we’re betting on a resourceful global supply chain in 2024! 

Itching to weigh in on our little tirade and/or rant about your current escapades? Contact Shapiro today

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