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Panama Canal transit crisis will lead to cost increases in foreign trade

Emphasizing that the limitation imposed on the number of tankers passing through the Panama Canal due to the drop in water level will increase transportation prices, Dr. Hakan Çınar said, "This will be reflected in the costs of consumers. It will affect global trade and bring new challenges to countries struggling with inflation."

Panama Canal transit crisis will lead to cost increases in foreign trade

Dr. Hakan Çınar, President of the Association of Foreign Trade Leaders (DIŞYÖNDER), reported that the drought-related crisis in the Panama Canal, one of the world's important centers in maritime transportation, will turn into an increase in costs in foreign trade.

Dr. Hakan Çınar emphasized that the decreasing water level in the canal due to insufficient rainfall negatively affected the number of tankers passing through. Stating that it is not clear how long the recession in the canal and this traffic disruption will last, Çınar said, "It is certain that such disruptions, which have emerged while we have just recovered from the effects of the global crisis, will harm the transportation sector. However, at the end of the day, this situation will be reflected in transportation prices and the costs of us consumers. This will affect global trade and bring new challenges to countries struggling with inflation."

Pointing out that the Panama Canal is a very important water canal connecting the Atlantic Ocean and the Pacific Ocean in Central America, Dr. Çınar concluded his words as follows:


"Every year, 14,000 tankers, cargo and passenger ships use the Panama Canal. This amount corresponds to about 6 percent of global maritime traffic. The lack of rainfall in Panama, the 5th wettest country in the world, has significantly disrupted ocean transportation these days. Due to the drought, ship passage in the Panama Canal has been limited. While the number of ships passing between 40-45 on average daily has been limited to 32 ships a day until September 2, it is among the information that nearly 200 ships are currently waiting in line.

The US is the biggest user of the Panama Canal with its commodity export and import containers. 40 percent of all US container traffic passes through the canal every year, with cargo worth about 270 billion dollars. In the event that the Panama Canal becomes dysfunctional and the time period is prolonged, the only alternative for maritime transportation will be the Drake Passage between the southern tip of Argentina and Antarctica. It may provide an alternative for overland transportation, but in any case, I can already say that transportation costs will increase significantly and will have repercussions on the global economy.


These developments can be expected to make the Central Corridor, which is involved in the trade traffic from Beijing to London, reaching 600 billion dollars annually, even more valuable. Although the use of the Central Corridor, which starts from Turkey, goes to the Caucasus, then across the Caspian Sea, through Turkmenistan and Kazakhstan to Central Asia and China, will be an advantage for our country, it does not eliminate the fact that we will feel the cost increases more, especially in product groups such as cereals, which are lighter in cost."


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