Disruptions in Maritime Transport
Recent attacks by Houthi rebels on maritime transport have led to a concerning decline in trade volume passing through the Suez Canal. According to a representative of the United Nations Conference on Trade and Development (UNCTAD), trade volumes have decreased by a staggering 42% over the past two months. These disruptions exacerbate existing challenges trade faces due to geopolitics and climate change.
Largest Container Ships Bypassing the Suez Canal
The Houthi attacks have prompted shipowners to suspend transits through the Red Sea, choosing instead to bypass Africa. Consequently, there has been a significant decline in container quantity, as the largest container ships mainly no longer use the Suez Canal. Additionally, tanker transit is down 18%, bulk cargo is down 6%, and gas transportation has come to a complete halt.
Houthi Rebels Target Red Sea and Gulf of Aden Shipping Lanes
- Since November 2023, Houthi rebels have been targeting ships in the Red Sea and Gulf of Aden that they believe are linked to Israel.
- This is out of solidarity with Palestinians in Gaza who suffer from Israel’s extensive military operations following an unprecedented attack by Hamas on its soil.
- Global goods trade is already facing tension, with over 80% occurring at sea; therefore, these additional disruptions in the Red Sea are particularly concerning.
Alternative Maritime Routes Face Challenges
Other critical shipping routes face their own hurdles, further exacerbating tensions in global trade. For example, after Russia’s invasion of Ukraine, transit through the Black Sea saw significant disruption. This led to a surge in global food prices in the months that followed. UNCTAD reported that the number of passages through the Black Sea canal decreased by 36% compared to a year earlier and by 62% compared to two years earlier.
Potential Impact on Global Supply Chains
Extended disruptions on major trade routes could have serious consequences for global supply chains. This may result in delays in goods deliveries, increased costs, and a risk of inflation. The United Nations agency is particularly concerned about the impact these disruptions might have on global food prices.
Key Impacts of Disruptions on Global Supply Chains:
- Delays in goods deliveries
- Increased costs
- Risk of inflation, particularly with respect to global food prices
Mitigating the Effects of Maritime Transport Disruptions
To address the challenges facing global trade caused by these disruptions, several steps can be considered. First, it’s essential to promote diplomatic efforts towards resolving conflicts affecting shipping routes. Second, investing in alternative transport options, such as rail or airfreight, can help to diversify transportation modes and reduce reliance on sea travel. Furthermore, promoting regional trade agreements may also alleviate some vulnerabilities due to shipping route issues.
Possible Steps to Address Trade Challenges:
- Diplomatic conflict resolution
- Investment in alternative transport options (e.g., rail or airfreight)
- Promotion of regional trade agreements
In summary, the recent Houthi attacks on shipping lanes have contributed significantly to the decline in trade volume passing through the Suez Canal. The repercussions of these disruptions have further strained global supply chains and underscore the growing importance of finding ways to mitigate tensions in maritime transport. Diplomatic efforts, investment in alternative transport options, and promotion of regional trade agreements will be vital to addressing these challenges and ensuring the continuous flow of goods around the world.
