The crises of Panama Canal and the Red Sea threaten Biden in the upcoming US elections

The winds of inflation in the United States aren’t moving as US President Joe Biden desires, who is seeking to achieve economic and livelihood gains for voters less than a year before the presidential elections.

After inflation recorded a level of approximately 3% last November, it rose again to the level of 3.7% in December 2023.

Inflation in the prices of goods and services is considered one of the main factors upon which the American voter chooses his presidential candidate, along with other components, most of which are related to the internal and foreign policies of the White House.

While the Gaza war has become a major pressure factor on President Biden, due to his absolute support for Israel, the Red Sea and Panama Canal crises will increase the speed of the headwinds for the Democrats’ efforts in the upcoming elections.

According to CNN, Arab voters, along with a wide segment of young American voters, won’t vote for Biden in the upcoming elections because of his position on the Gaza war.

Returning to inflation, the decline in the number of ships crossing the Red Sea and from there to the Suez Canal, reaching the eastern coast of America, led to the impact of the arrival of supplies of goods.

The number of ships taking the Cape of Good Hope route south of South Africa increased by 67% during the first months of this year, compared to last December, according to the International Monetary Fund.

With this route, sea freight prices have increased by up to 170% compared to pre-Red Sea crisis numbers, which will transfer the cost of transportation to the final consumer.

According to Vissel Tanker data tracking marine shipping companies, the trip via the Cape of Good Hope route means a delay of goods for up to two weeks, and an increase of $1 million for each container ship.

East Asia, specifically China, is considered the largest trading partner of the United States, which means that the continuation of the Red Sea crisis will add to inflation a rate ranging between 0.7 – 1% if the crisis continues for a full year, according to estimates by the US Department of Commerce.

According to Chinese customs data, the value of Chinese exports to the United States during the past year amounted to about $500.3 billion.

In the face of this crisis, the American voter, who is suffering financially due to the rise in commodity prices, will look for a candidate who makes better promises regarding prices.

During President Biden’s term, the United States recorded the highest inflation rate in 41 years, reaching 9.1% in June 2022, coinciding with the Russian-Ukrainian war and rising energy prices.

Despite 11 increases in US interest rates since March 2022, the US Federal Reserve’s efforts haven’t succeeded in reaching the inflation target of 2% to date.

Due to the severe drought in the Central American region, the authorities in Panama recently reduced the number of ships allowed to pass through the Panama Canal by 36%.

As of January 18, the waiting time for a ship wishing to cross the canal ranged between two and 55 days, depending on the type of ship and whether it was heading north or south, according to the global ports’ agency WaterFront Maritime Services.

This delay prompted some shipping companies to change their route south of South America, resulting in financial costs and delays in the arrival of goods coming to the eastern coast of the United States.

The rerouting of cargo ships has led to a severe shortage of shipping containers, leading to what is known as the “container crisis”.

The Panama Canal is fed by some large lakes in Panama, not sea water, and each ship’s crossing takes about 200 million gallons of canal water, which moves towards the Atlantic or Pacific Ocean.

This year, Panama witnessed a major drought, at a time when the lakes, which are a major water source for the canal, feed more than 50% of the country’s population of 4 million people, according to official Panamanian government data.

The number of ships crossing the canal has decreased from an average of 40 ships per day, to approximately 25 ships at the present time, and the remaining number take a longer route that passes through southern South America.

As a result of the conflict in the Red Sea and the drought in the Panama Canal, shipping costs are rising, and with shipments delayed, there are concerns that oil and retail prices could rise.