UN warns Red Sea conflict affecting trade; Suez shipping drops by 42%

While the Black Sea, a major conduit for food grains from Ukraine, has been affected by the war, the Panama Canal has been hit by climate change-related problems.

Droughts have reduced water in the canal to the lowest level in decades reducing the number and sizes of the ships that can transit it.

Hoffman said that the disruptions in key global trade routes have already led to a rise in energy prices.

“Prolonged disruptions in major trade routes would disrupt global supply chains, leading to delayed deliveries of goods, increased costs and potential inflation,” he said.

In Suez Canal affected by the Red Sea attacks by Houthi rebels, “the container shipping sector faces a significant challenge”, Hoffmann said.

Early data from 2024 showed that over 300 container vessels – over 20 per cent of global container capacity – were being diverted from or planning alternatives to the Suez Canal, he said.

Ships carrying gas have altogether stopped using the Suez because of the catastrophic impact an attack on them would have.

Container ship transits per week are down 67 per cent compared to a year ago while tanker traffic is down by 18 per cent, and in the category of dry bulk carriers, which transport grains or coal, shipping is down 6 per cent.

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