UNCTAD, the UN’s trade and development body, has significant concerns over growing disruptions to global trade. It says that recent attacks on ships in the Red Sea, along with geopolitical tensions affecting shipping in the Black Sea and the impacts of climate change on the Panama Canal have caused a complex crisis affecting key trade routes.
The Suez Canal, a key waterway connecting the Mediterranean Sea to the Red Sea, handled approximately 12-15% of global trade in 2023. UNCTAD estimates that trade volume through the canal decreased by 42% over the last two months. In response to the Red Sea crisis, major players in the shipping industry have temporarily suspended Suez transits. Weekly container ship transits have fallen by 67%. Tanker transits and gas carriers have also seen major declines.
The ongoing war in Ukraine and its impact on the Black Sea have triggered major shifts in the oil and grain trades, changing established trade patterns. The crisis, along with impacts from problems in the Red Sea and Panama Canal, is impacting global food prices, with longer distances and higher freight rates potentially causing increased costs. Disruptions in grain shipments from Europe, Russia and Ukraine pose risks to global food security.
The Panama Canal, another key trade route, is struggling with a severe drought caused by climate change. It has lowered water levels, causing a 36% reduction in total transits over the past month compared to a year ago. The long-term impacts of climate change on the canal’s capacity are raising concerns about global supply chains.
Shipping rates are being impacted. The $500 surge in average container spot freight rates during the last week of December was the highest ever weekly increase. Average container shipping spot rates from Shanghai have more than doubled (up 122%) since early December. Rates from Shanghai to Europe have more than tripled (up 256%). Rates to the U.S. west coast increased by 162%.
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