The Suez Canal and the Panama Canal are the two most important shipping arteries in the world.

In the third quarter of this year, more than half of all trade ships traveling between Asia and North America passed through the Panama or Suez Canals, according to MDS Transmodal, a trade analysis group.

In addition to crude oil and natural gas energy, a large proportion of the traded goods in the Suez Canal belong to electronics, clothing, toys and other end products.

In addition to about 26% of the annual transportation business of the Panama Canal involving liquefied petroleum gas, liquefied natural gas and other commodities, a large part of the cargo is from the North and South America's respective agricultural products, such as corn and soybeans in the United States, Brazilian beef, Chilean red wine and copper ore, Ecuador bananas and other South American countries fruit, meat, fish and shrimp agricultural products.

In particular, the impact of the drought on the Panama Canal has been most pronounced in the United States, which is the largest user of the canal, accounting for more than 70 percent of cargo traffic. In 2022, 26 percent of U.S. soybeans and 17 percent of U.S. corn exports will pass through the Panama Canal to Asian markets.

Now is the US crop export season, the Panama Canal is congested, the US agricultural products have to take a long way, resulting in a significant increase in export costs.

At the same time, the time is now in the northern hemisphere winter, China ushered in the coldest winter this year, Europe will not be good to go, at the same time, it is also the key point of Christmas stocking, the busiest year-end sales season of the year, but to now, the two major shipping arteries have been affected by the restrictions.

Although the bypass can eventually solve the problem, it takes a longer time, resulting in short-term commodity demand is not met.

On December 9, the UK Import and Export Institute made it clear that a large number of goods are at risk of being delayed and will not arrive in time for Christmas this year.

This is not only the problem that prices may rise again, in such a winter season, if there is a short-term energy supply, the problem may be more serious.

Iv. Summary

The blockage of the canal triggered a price hike in Europe last year, with electricity bills soaring several times in many regions and the prices of meat, vegetables and other food continuing to soar, leading to the worst inflation crisis in history.

The simultaneous constraints on the world's two main shipping arteries will not trigger the kind of hyperinflation seen last year, but the impact is likely to be significant.

This has brought some uncertainty to the newly suppressed inflation in Europe and the United States.