Middle East unrest, Panama Canal delays: The global factors impacting the U.S. medical supply chain

Geopolitical events have had major impacts on the U.S. medical supply chain in 2023 and promise to continue doing so in 2024, according to a Jan. 23 blog post from major supplier Premier. 

Here are the major geopolitical events that are expected to impact the medical supply chain in 2024: 

Unrest in the Middle East: The Israel-Hamas conflict is adding to supply chain shortages as suppliers are facing labor availability issues, production stoppages and higher oil prices. The conflict has also led to attacks on commercial ships in the Red Sea, causing 6 of the 10 top container carriers to divert their routes. Shipping route alternatives can add 4,000 nautical miles, or 10 to 14 days, delaying product delivery times. 

The Panama Canal: An extended dry season in Panama has reduced the water levels necessary for ships to travel through Panama Canal locks. Commercial ships are facing long lines and delays to pass. The canal is responsible for moving 80% of global trade, and  authorities have placed restrictions on daily vessel transits that are expected to remain for at least several months. Additionally, some ships are being forced to carry 40% less cargo to decrease weight in low-level water. 

Global dependencies: Global trade flows are moving away from the world's largest good supplier, China. Mexico surpassed China as the U.S.' largest trading partner for the first time in 2023. Taiwan is also a crucial player in healthcare supply production, and escalated tensions between China and Taiwan could further pose trade and transport challenges. In Aug. 2023, the Biden administration issued an executive order with the goal of preventing investments that might inadvertently benefit China's military and surveillance capabilities.

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