Dire straits

Local problems often have a global impact. Since the beginning of the Red Sea crisis in October 2023, traffic through the Suez canal has plummeted due to dangers at the appropriately named Bab-el-Mandeb (Gate of Lamentation) 1200NM further south, with an impact which neither the covid pandemic nor two vessels running aground and blocking the canal were able to achieve. An estimated USD 3 billion of cargo and 30% of global container traffic passed through the canal before the crisis, highlighting its importance to global trade. The re-routing of relevant traffic around the Cape of Good Hope adds time, cost, emissions, and complexity to the journey, straining supply chains. Global ton-miles rose by 4.2% in 2023, and if the increase in container freight rates continues it could have a lasting impact on consumer prices. The crisis further highlights the advantages of reducing dependence on energy shipped in the form of petroleum products.

Source: UN Trade and Development, November 2024.