The UN's trade and development body, UNCTAD, warned that the disruption caused by the Red Sea attacks, the geopolitical conflict in the Black Sea and the impact of climate change on the Panama Canal have caused a "complex crisis" affecting key trade routes.
A detailed analysis published by the UN organisation last month looked into the impact of all three factors on bulk shipping, container shipping and oil tankers.
Daily transit data from the Suez Canal show a dramatic drop towards the end of 2023, particularly for container ships. In addition, trade volumes moving through the Suez Canal fell by 42% over the last two months, says UNCTAD.
From the beginning of November 2023, until the top shipping lines announced they were diverting their ships around the Cape of Good Hope around mid-December, the average number of daily transits in the Canal was about 108 container ships.
From then until 23 January, the average dropped to about 62 ships per day. Given the massive number of vessels that completely avoided Bab al-Mandeb Strait, it is safe to say that most of these ships have crossed the Canal coming from the Mediterranean.
Vessel diversions see emissions surge
Another important consequence the UNCTAD studied was ship emissions.
The long distances caused by ship rerouting naturally require more burnt fuel. Additionally, many ships increased their speeds to minimise delays and ensure the availability of capacity for the next sail. As a result, emissions are bound to increase.
In a new analysis, Sea-Intelligence chief executive Alan Murphy said, "The actual change in emissions will vary dramatically, depending on port-port combinations, individual vessels."
However, the analysis firm estimates a 1% increase in speed could cause a 2.2% increase in fuel consumption.
Impact of the Black Sea conflict and the Panama Canal drought
In Europe, the Russia-Ukraine conflict - now approaching two years - has also created substantial shifts in oil and grain trades, breaking many established regional trade patterns.
In Central America, the severe weather conditions in the Panama Canal resulted in a "36% reduction in total transits over the past month compared to a year ago," reports UNCTAD. October 2023 had the lowest rainfall levels for the month since 1950.
UNCTAD calls for action
Such circumstances usually have a cascading effect on food and energy prices, directly impacting consumers globally.
"Disruptions in grain shipments from Europe, the Russian Federation and Ukraine pose risks to global food security, affecting consumers and lowering the prices paid to producers," highlighted UNCTAD.
The organisation believes the current challenges revealed the vulnerability of the global trade system. It stressed the "urgent need for swift adaptations from the shipping industry and robust international cooperation to navigate the rapid reshaping of global trade dynamics."
