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Suez Canal facing an unprecedented level of strain due to geopolitical tensions, weather impacts and conflict
By Arsenio Toledo // Jan 21, 2025

  • The Suez Canal, handling 15 percent of global maritime trade, faces unprecedented strain due to geopolitical tensions, weather impacts and Red Sea attacks, disrupting global supply chains and threatening economic stability.
  • Traffic through the Suez Canal dropped by 50 percent in early 2024, with many ships rerouting around the Cape of Good Hope, adding at least 10 days to shipping times and increasing costs.
  • Disruptions at key maritime chokepoints like the Suez have created a ripple effect, raising shipping costs, congestion and ton-miles, disproportionately affecting vulnerable economies.
  • UNCTAD calls for urgent action to enhance maritime resilience, including low-carbon shipping investments, port efficiency improvements and addressing fraudulent ship registrations to mitigate risks and support global trade.

The Suez Canal is one of the most important arteries in the global trade network – and now it is experiencing an unprecedented level of strain, threatening the stability of the world economy, energy supplies and food security.

According to the United Nations Conference on Trade and Development's (UNCTAD) "Review of Maritime Transport 2024" report, disruptions at key maritime chokepoints, including the Suez Canal, have created a perfect storm of geopolitical tensions, weather impacts and conflict. These challenges are reshaping global supply chains, driving up costs and disproportionately affecting vulnerable economies.

The Suez Canal, which connects the Mediterranean Sea to the Indian Ocean via the Red Sea, handles approximately 15 percent of global maritime trade volume.

However, traffic through the canal dropped by 50 percent in the first two months of 2024 compared to the previous year, according to data from the International Monetary Fund’s PortWatch platform. (Related: The USS Abraham Lincoln was just attacked in the Middle East, and Yemen's Houthis are claiming credit.)

This decline is largely attributed to attacks on vessels in the Red Sea region, which have forced shipping companies to reroute around the Cape of Good Hope. This detour adds 10 days or more to shipping times, increasing costs.

The Suez Canal crisis is part of a broader pattern of disruptions at critical maritime chokepoints. The Panama Canal, another key trade route, has also faced significant challenges due to weather-induced low water levels, reducing its capacity by 32 percent in early 2024. Together, these disruptions have created a ripple effect across global trade networks.

Rerouting ships around the Cape of Good Hope has surged by 89 percent, according to UNCTAD. While this maintains the flow of goods, it comes at a steep price. A large container ship carrying 20,000 to 24,000 twenty-foot equivalent units incurs an additional $400,000 in emissions costs per voyage under the European Union’s Emissions Trading System when bypassing the Suez Canal. Longer routes also increase fuel consumption, crew wages, insurance premiums and exposure to piracy.

Port hubs like Singapore and major Mediterranean ports are now grappling with congestion as they handle growing demand for transshipment services. This added complexity is straining global logistics networks, with ton-miles – a measure of shipping volume and distance – rising by 4.2 percent in 2023.

The disruptions are not felt equally. Small Island Developing States (SIDS) and Least Developed Countries are among the hardest hit. These nations rely heavily on shipping for essential imports, yet their maritime connectivity has declined by nine on average over the past decade.

If current trends continue, global consumer prices could rise by 0.6 percent by the end of 2025, with SIDS facing even steeper increases of 0.9 percent and processed food prices potentially rising by 1.3 percent.

"Small island states are ten times less connected to global shipping networks compared to non-SIDS countries," the UNCTAD report notes. This isolation exacerbates their vulnerability to supply chain disruptions, threatening food security and economic stability.

Suez Canal's challenges a microcosm of the broader issues facing global trade

The canal's strategic importance cannot be overstated. It reduces the distance between Europe and Asia by 8,900 kilometers (5,530 miles), saving shipping companies significant fuel and operational costs. However, its narrow width and reliance on toll revenues make it vulnerable to congestion and fluctuations in global trade.

UNCTAD's report calls for urgent action to build resilience in the maritime industry. This includes investing in low-carbon shipping, enhancing port efficiency and addressing fraudulent ship registrations. The rise of a "dark fleet" of ships operating outside international regulations poses additional risks to safety, security and pollution control.

The Suez Canal's challenges are a microcosm of the broader issues facing global trade. As UNCTAD emphasizes, coordinated efforts are needed to navigate these disruptions, support vulnerable economies and accelerate the transition to sustainable shipping.

"The Suez Canal is a symbol of human ingenuity and a cornerstone of global trade," the report concludes. "By adapting to these challenges, we can ensure it remains a vital lifeline for the world economy."

Watch this video discussing plans by Russia, Iran and India to bypass the Suez Canal through a series of transportation networks that go through Iran nicknamed the Second Persian Corridor.

This video is from the channel MEGA Make Earth Great Again on Brighteon.com.

More related stories:

Red Sea shootdown: Did the Houthis play a role in the U.S. Navy's "friendly fire" incident?

Egypt's Suez Canal to take more vessels as drought-stricken Panama Canal deals with bottleneck situation.

Depopulating Gaza could facilitate Israel's plans to build a lucrative rival to the Suez Canal.

Suez Canal blockage disrupted global supply chains already strained by pandemic.

Sources include:

UNCTAD.org

IMF.org

Info.KerryLogisticsOceania.com

Vocal.Media

Brighteon.com



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