How the 2023 Panama Canal drought impacted the supply chain in 2024

Looking back at 2023, we saw a mix of exciting wins and unique challenges for apparel brands worldwide. Black Friday brought a nearly historical peak, with supply chain executives, “100% ecstatic with the results.” But beneath the surface of the retail rejoice, we saw a string of difficulties facing the global shipping industry — particularly concerning the Panama Canal. 

The underlying cause of the canal challenges is a persistent drought linked to El Niño, affecting water levels at Lake Gatun, the vital artificial lake sustaining the canal's lock system. As of Thursday, the lake's depth stood at over 81 feet, nearly five feet below the five-year average.

As a result, according to Sourcing Journal, The Panama Canal faced a backlog, with 110 vessels patiently waiting, including 51 pre-booked and 59 non-booked ships seeking passage. The wait times for non-booked vessels surged dramatically in November, 2023, reaching an average of 10 days for northbound ships and 11.2 days for southbound vessels.

2023 turned out to be Panama’s third driest year on record, so it’s no surprise that global industries shipping through the area took a hit.

In the face of these challenges, many brands braced for potential disruptions, prompting a strategic exploration of alternative routes to ensure the smooth flow of goods worldwide.

2024 impacts of the Panama Canal drought

At the end of 2023, only 22 ships were allowed to transit the Panama Canal per day — as opposed to the typical 32. In early 2024, significant rainfall occurred in the area, so the traffic quota was able to rise. But it didn’t snap back up to 32 overnight.

Over the course of 2024, the quota rose slightly each month, reaching 32 transits per day in June. While that’s a victory for manufacturers transporting in the area, the revenue consequences for nearly a year of delayed shipments are substantial. Hundreds of millions of dollars were lost in the last fiscal year due to the crisis.

Rich Ringeisen, President of Charming Trim, shed some light on the company’s response to the drought.

“To limit the impacts of Panama Canal supply chain delays, we have rebalanced our production locations to better fit with the majority of the world’s production locations,” he shared. 

Now, Charming Trim’s global presence spans the following countries:

• China
• Hong Kong
• Bangladesh
• Cambodia
• Vietnam
• India
• Sri Lanka
• Pakistan
• Belgium
• The Netherlands
• Germany
• Italy
• Turkey
• Spain
• France
• United Kingdom
• Guatemala
• Mexico 
• The United States

If you are shipping apparel trim, digital embellishments, packaging and identification requirements by sea from Asia to the East Coast, or if you'd like to look at production options like Mexico or Guatemala to avoid the Canal altogether, send us a message.

We’re prepared to help.

Editor’s note: This post was originally published in December of 2023 and has been revamped for relevancy.