2024 Outlook: Shipping & Climate
SHIPPING
International shipping faced disruptions and delays in 2023, and some of these problems are expected to continue. Shippers have been watching the Panama Canal, as drought in the area has resulted in less water for the freshwater lakes that feed into the canals’ locks. This has caused a buildup of ships in the queue and longer wait times for passage through. As of writing, there are dozens of tanker and container ships waiting on either side of the canal.
Some shippers have sought to bypass the Panama Canal by using the Suez Canal for travel from Asia to the US East Coast, but attacks on ships in the Red Sea have made that option less attractive. This, in turn, has shifted more interest in bookings from Asia to US West Coast ports and transit from Asia to the East Coast around the Cape of Good Hope.
As this situation continues to develop, the tea industry can expect:
- Transit delays. Look for shippers to avoid risks at canals and take longer routes to the East Coast, or contribute to a potential log jam at West Coast ports. There is some consensus that there is an overcapacity of ships available compared to actual, overall cargo demand. This could lead to cancelled shipments and further exacerbate departure scheduling.
- Ocean rate fluctuation. As mentioned, the overall outlook points to an oversupply of capacity compared to cargo. This would tend to keep rates low, but rates may still oscillate due to the risks and delays related to using/avoiding canals.
IN SHORT: plan early and anticipate delays
EL NINO
El Nino was associated with droughts and record temperatures across the globe, and forecasts expect the El Nino weather pattern to extend into April 2024 in many areas. Similarly, reports indicated 2023 was on track to be the warmest year on record for China since 1850. Official China tea production data has not yet been released, but there have been no reports thus far of widespread drops in yields. Export prices gave no indication of diminished supply either. China anticipates the El Nino pattern to bring wetter weather in the southern regions and warmer temps in northern regions. That may bode well for an early flush, but also opens the door to increased pest and disease problems for crops, including tea. On the brighter side, conditions may create more impetus for improvements in farm practices for pest and water management.
Stay tuned for updates. If you have questions or concerns about how these conditions may affect your tea business, please contact info@firsdtea.com or your regular representative.