Shafaq News/ The global economy isincreasingly at risk due to “vulnerabilities at key maritime routes,” warned theReview of Maritime Transport 2024 report from the UN Trade and Development(UNCTAD).
The report indicated that if thecrisis in the Red Sea and the Panama Canal persists, global consumer pricescould rise by 0.6% by 2025. For small island developing states (SIDS), theimpact would be more severe, with prices rising by 0.9%, and processed foodprices potentially increasing by 1.3%.
The organization's report, dedicatedto maritime transport, stated, “Critical chokepoints - such as thePanama Canal (connecting the Pacific and Atlantic Oceans), the Red Sea and theSuez Canal (linking the Mediterranean Sea to the Indian Ocean via the ArabianPeninsula), and the Black Sea (an important hub for grain exports) - are undersevere strain.”
“A combination of geopoliticaltensions, climate impacts, and conflicts have shaken global trade, threateningthe functioning of maritime supply chains,” it added.
Additionally, the UN report notedthat maritime trade, which grew by 2.4% in 2023 to reach 12,292 million tons,has begun to recover after a contraction in 2022. However, the future remainsuncertain, with modest growth of 2% expected for 2024, driven by demand forbulk commodities like iron ore, coal, and grains, alongside containerizedgoods. “Yet, these figures mask deeper challenges,” it cautioned.
Container trade, which grew by just0.3% in 2023, is expected to rebound by 3.5% in 2024. Meanwhile, the supply ofcontainer ship capacity increased by 8.2 percent in 2023. It was noted thatlong-term growth will depend on how the industry adapts to ongoing disruptionssuch as the war in Ukraine and increasing geopolitical tensions in the MiddleEast.
Major shipping routes have facedsignificant disruptions, causing delays, rerouting, and increased costs, astraffic through the Panama and Suez Canals—vital arteries for global trade—hasdropped by over 50% by mid-2024 compared to its peak.
“This decline was driven byclimate-induced low water levels in the Panama Canal and the outbreak ofconflict in the Red Sea region affecting the Suez Canal. Meanwhile, the tonnageof ships transiting through the Gulf of Aden and the Suez Canal fell by 76% and70% respectively, compared to late 2023,” the report clarified.
Rerouting shipments around the Capeof Good Hope (southern tip of Africa) has led to increased congestion in ports.In this context, the report said, “Cargo rerouting around the Cape of Good Hope(southern tip of Africa) has surged, with ship capacity arrivals increasing by89%. While this helps maintain the flow of goods, it adds significantly tocosts, delays and carbon emissions. For example, a typical large container shipcarrying 20,000–24,000 twenty-foot equivalent units (TEUs) on the FarEast-Europe route incurs an additional $400,000 in emissions costs per voyageunder the European Union’s Emissions Trading System (ETS) when diverting aroundAfrica instead of using the Suez Canal.”
By mid-2024, redirecting ships awayfrom the Red Sea and Panama Canal resulted in a 3% increase in global demandfor vessels and a 12% increase in demand for container ships compared to whatit would have been without these disruptions.
The report confirmed, “This addedsignificant pressure to global logistics and strained supply chains.” Portcenters like Singapore and major Mediterranean ports are currently underpressure as they cope with the increased demand for transshipment services dueto the rerouting of vessels.
“Congestion in these ports is addinganother layer of complexity for global transport and trading networks,” it pointedout.