Banana Industry in Q1-24 Faces Logistical Challenges Due to Weather-Related Issues and Traffic Restrictions in the Panama Canal

The Q1-24 is anticipated to face substantial challenges in the banana industry, primarily from logistical issues influenced by adverse weather conditions. Given that approximately 82% of bananas traverse the Panama Canal, Ecuador, ranking as the ninth largest user, is significantly impacted, representing 4.9% of the canal's usage in 2023. The vulnerability of the banana industry arises from the perishable nature of bananas, which are susceptible to damage and chilling during prolonged transit times. The prevailing drought in the canal region has led to heightened traffic restrictions, prompting major shipping companies such as MSC, CMA CGM, and Hapag Lloyd to introduce surcharges for containers navigating the canal. While MSC has already implemented the surcharge on December 15, the other two are set to commence from January 1, 2024. Exploring alternative routes, Sea Trade is contemplating the Strait of Magellan, considering its comparable costs to those associated with the Panama Canal.