Container shipping saw a record rise in costs, up $500 in late December. This spike occurred amid disruptions on crucial sea paths, notably the Panama Canal.
The United Nations Conference on Trade and Development (UNCTAD) reported these changes.
Attacks in the Red Sea and a drought in the Panama Canal led to lower traffic. This canal is crucial for trade in South America’s west.
Ships now seek other paths, leading to longer journeys, more costs, and higher insurance rates. Greenhouse gas emissions increase as ships cover more distance at greater speeds.
A significant drop in ships using the Panama Canal shows the extent of the disruption.
Transit through this canal fell by 49%, and the Suez Canal saw a 42% decrease. Container ships, oil tankers, and gas carriers all report fewer journeys.
This drop raises concerns about the resilience of global supply chains.
UNCTAD highlights the impact of these challenges on global trade, affecting millions worldwide. The need for faster ship speeds increases fuel use and emissions.
This situation adds economic and environmental costs, pressuring developing nations.
Impact on Global Trade Routes
Rate hikes from Shanghai illustrate the issue, with costs soaring up to 256% for some routes.
Despite not passing through the Suez Canal, rates to Europe and the USA’s west coast jumped significantly.
The disruptions in the Panama Canal are particularly critical for certain markets. About 22% of trade from Chile and Peru depends on this route.
Ecuador also feels the impact, with 26% of its trade passing through the canal.
This canal is a key trade route, moving $270 billion in goods annually, and is Panama’s top income source.
Maritime transport is essential, moving 80% of global goods. UNCTAD predicts a 5% fall in global trade due to geopolitical issues.
In short, this forecast underlines the uncertain and challenging outlook for global trade.