Shipping giant Maersk will begin using a railway “land bridge” to continue services through South America in response to the ongoing restrictions at the Panama Canal. 

The Danish shipping company said that its OC1 service between Oceania and the Americas would now be carried by two separate “loops” with cargo destined for the latter dropped off by ships at Balboa, Panama, and cargo heading the other way dropped off at Manzanillo, Panama. 

The cargo dropped off at either end of the country will then be transported 80km across Panama to the ships on the other side by rail, thus avoiding the need for the troubled canal route. 

The company has also said that northbound vessels stopping in Philadelphia and Charleston will not see any delays as a result of the change, though vessels southbound may experience longer journey times. 

Maersk’s announcement follows months of restrictions at the vital trade route as it suffers from record droughts, with 2023 the second driest year on record for the canal, leading the Panama Canal Authority to reduce capacity along the route, though the most recent update saw it beginning to raise the number of slots again

Additionally, while not directly connected to Maersk’s use of a land bridge, the company has also been suffering from a decision to indefinitely reroute vessels away from the Red Sea and the Suez Canal, another vital route for global trade, in response to the escalating conflict in the area by the Yemen Houthi militant group. 

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By GlobalData

Notably, some carriers, such as those in the THE Alliance, had been rerouting some vessels bound for Panama via the Suez Canal to avoid the drought-led restrictions.