bongdaso nétNews #84 - Maritime chokepoints expose supply chain vulnerability: UNCTAD

Traffic through Panama and Suez Canals - critical arteries of global trade - dropped by over 50% by mid-2024.

bongdaso nét global economy, food security and energy supplies are at increasing risk due to vulnerabilities at key maritime routes, according to

bongdaso nét latest report reveals that critical chokepoints - such as bongdaso nét Panama Canal (connecting bongdaso nét Pacific and Atlantic Oceans), bongdaso nét Red Sea and bongdaso nét Suez Canal (linking bongdaso nét Mediterranean Sea to bongdaso nét Indian Ocean via bongdaso nét Arabian Peninsula) and bongdaso nét Black Sea (an important hub for grain exports) - are under severe strain. "A combination of geopolitical tensions, climate impacts and conflicts have shaken global trade, threatening bongdaso nét functioning of maritime supply chains."

Maritime trade, which grew by 2.4 percent in 2023 to reach 12,292 million tonnes, had begun to recover after a contraction in 2022, bongdaso nét report added. "However, bongdaso nét future remains uncertain. bongdaso nét report projects a modest two percent growth for 2024, driven by demand for bulk commodities like iron ore, coal, and grain, alongside containerised goods. Yet, these figures mask deeper challenges. Container trade, which grew by just 0.3 percent in 2023, is expected to rebound by 3.5% in 2024 but long-term growth will depend on how bongdaso nét industry adapts to ongoing disruptions such as bongdaso nét war in Ukraine and rising geopolitical tensions in bongdaso nét Middle East.

“Meanwhile, bongdaso nét supply of container ship capacity grew by 8.2 percent in 2023. Disruptions at key maritime chokepoints, which temporarily increased demand for ships by lengthening shipping routes, have helped ease bongdaso nét issue of overcapacity. However, if shipping routes return to normal, bongdaso nét imbalance between supply and demand could lead to container vessel overcapacity."

Rebeca Grynspan, Secretary-General, UNCTAD says: "Building sustainable and resilient maritime transport and future-proofing global supply chains is not just an option – it’s a strategic necessity.”

Disruptions at major maritime chokepoints

Key shipping routes have faced significant disruptions, causing delays, rerouting and higher costs, bongdaso nét report added. "Traffic through bongdaso nét Panama and Suez Canals - critical arteries of global trade - dropped by over 50 percent by mid-2024, compared to their peaks. This decline was driven by climate-induced low water levels in bongdaso nét Panama Canal and bongdaso nét outbreak of conflict in bongdaso nét Red Sea region affecting bongdaso nét Suez Canal. Meanwhile, bongdaso nét tonnage of ships transiting through bongdaso nét Gulf of Aden and bongdaso nét Suez Canal fell by 76 percent and 70 percent, respectively, compared to late 2023.

"Cargo rerouting around bongdaso nét Cape of Good Hope (southern tip of Africa) has surged, with ship capacity arrivals increasing by 89 percent. While this helps maintain bongdaso nét flow of goods, it adds significantly to costs, delays and carbon emissions. For example, a typical large container ship carrying 20,000–24,000 TEUs on bongdaso nét Far East-Europe route incurs an additional 0,000 in emissions costs per voyage under bongdaso nét European Union’s Emissions Trading System (ETS) when diverting around Africa instead of using bongdaso nét Suez Canal."

Longer routes, higher costs

These longer routes have led to increased port congestion, higher fuel consumption, crew wages, insurance premiums and exposure to piracy. "Global tonne-miles rose by 4.2 percent in 2023, driving up costs and emissions. By mid-2024, rerouting vessels away from bongdaso nét Red Sea and Panama Canal had increased global vessel demand by three percent and container ship demand by 12 percent compared to what it would have been without these disruptions. This added significant pressure to global logistics and strained supply chains.

"Port hubs like Singapore and major Mediterranean ports are now under pressure as they cope with growing demand for transshipment services due to bongdaso nét rerouting of vessels. Congestion in these ports is adding another layer of complexity for global transport and trading networks."

Between March and May 2024, waiting times in Singapore nearly doubled from 24 to 40 hours while in Port Klang, Malaysia, bongdaso nét number went up from 20 to 26 hours. "Faced with low water levels linked to climate-induced droughts, draft restrictions in bongdaso nét Panama Canal in 2023 led to shipment delays and higher costs. This has impacted trade routes exporting grains and minor bulk commodities from bongdaso nét Americas to Asia, with a 31 percent increase in sailing distances for completed journeys and a 25 percent decrease in cargo volume."

By sector, technology exports from Asia – most notably green energy and artificial intelligence-related products – are expected to drive further recovery in global merchandise trade, bongdaso nét report added.

Key recommendations

As bongdaso nét maritime industry faces growing challenges, UNCTAD’s report urges coordinated efforts to navigate, adapt and thrive in bongdaso nét complex environment. It calls for addressing disruptions at maritime chokepoints, investing in low carbon and green shipping, enhancing port efficiency and adaptation, mainstreaming trade facilitation to improve hinterland connectivity and combating fraudulent ship registration. Additionally, bongdaso nét report emphasises bongdaso nét importance of monitoring freight market developments, assessing trends in shipping rates and their impacts supporting vulnerable economies.

Source: https://www.itln.in/shipping/maritime-chokepoints-expose-supply-chain-vulnerability-unctad-1353543?infinitescroll=1

Share this article