A 2024 report by the United Nations Conference on Trade and Development (UNCTAD) warned that the global economy is increasingly at risk due to vulnerabilities in major maritime routes .
The report indicated that if the crisis in the Red Sea and the Panama Canal continues, global consumer prices may rise by 0.6 percent by 2025, while the impact for small island developing states will be more severe, as prices will rise by 0.9 percent, and processed food prices may rise by 1.3 percent .
Critical choke points – such as the Panama Canal (which connects the Pacific and Atlantic Oceans), the Suez Canal (which connects the Mediterranean Sea to the Indian Ocean via the Arabian Peninsula) and the Black Sea (an important hub for grain exports) – are under severe pressure, the organization’s report on maritime transport said in Geneva .
The report indicated that a combination of geopolitical tensions, climate impacts and conflicts has shaken global trade, threatening the operation of maritime supply chains .
The report said that seaborne trade, which grew by 2.4 percent in 2023 to reach 12,292 million tons, began to recover after a contraction in 2022, but the future remains uncertain .
The report expected modest growth of 2 percent for 2024, driven by demand for bulk commodities such as iron ore, coal and grains, in addition to containerized goods. The report noted that these figures, however, hide deeper challenges .
The report forecast that container trade, which grew by just 0.3 percent in 2023, would rebound by 3.5 percent in 2024. Meanwhile, the supply of container ship capacity grew by 8.2 percent in 2023. It said that long-term growth would depend on how the industry adapts to ongoing disruptions such as the war in Ukraine and rising geopolitical tensions in the Middle East .
The report explained that major shipping routes faced major disruptions, causing delays, rerouting and higher costs, as traffic through the Panama and Suez Canals – vital arteries of global trade – fell by more than 50 percent by mid-2024 compared to its peak .
He pointed out that this decline is driven by the climate-induced decline in water levels in the Panama Canal and the outbreak of conflict in the Red Sea region, which affected the Suez Canal .
The report stated that rerouting of shipments to the Cape of Good Hope and increasing distances led to increased port congestion, higher fuel consumption, crew wages, insurance premiums and exposure to piracy .
By mid-2024, the diversion of ships away from the Red Sea and the Panama Canal has increased global demand for ships by 3 percent and demand for container ships by 12 percent compared to what it would have been without these disruptions, he said .
The report stressed that this added great pressure on global logistics services and strained supply chains, and said that port centers such as Singapore and major ports in the Mediterranean are now under pressure as they deal with the increasing demand for transshipment services due to the diversion of ships, while congestion in these ports adds another layer of complexity to global transport and trade networks.
