Panama Drought to Test Global Trade’s Resilience: Supply Lines

Global trade faces another possible stress test, and this time the culprit isn’t a pandemic or war but extreme weather.

A severe drought around the Panama Canal is forcing container vessels to lighten their loads, Bloomberg’s Laura Curtis, Ruth Liao and Michael McDonald reported here. That shrinks available capacity, boosts the risk of delays and leads to surcharges paid by cargo owners.

If the situation deteriorates and Gatun Lake levels keep falling as forecast, the market reaction will be higher shipping rates and a scramble by the carriers to find faster routes, according to analysts.

The timing could be bad, too, because shipping ...