How the triple crisis in the Suez, Panama and Ukraine canals affects world trade

World trade is currently affected by a perfect storm when three crises coincide in time: the disruption of routes in Ukraine due to the war, the virtual closure of the Suez Canal due to bombings in the Red Sea and the drastic decrease in traffic in the Panama Canal.

This was stated in a telematic press conference at UN headquarters by Jan Hoffman, head of the technology division at UNCTAD, the United Nations organization for trade and development.

Decrease in commercial traffic

Hoffman explained that The Panama Canal currently has 36% less traffic than the previous year, and 62% less than the previous one due to the drop in water level due to drought in the area, that is, due to causes linked exclusively to climate change.

Added to this crisis with no end in sight is the tension in the Red Sea, through which 20% of the world’s containers transit and vital for the connection between Europe and Asia: currently, container transit has fallen by 67% compared to a year ago, and given that the large container ships are the most affected , the impact on the total volume of merchandise represents an even higher percentage.

Freighters carrying oil are now 77% less than a year ago, and those that transport gas – which would suffer more dramatically if their tanks were shot at – have completely avoided the Red Sea route since January 16, he said.

The drastic drop in traffic causes the increase in prices

This drastic drop in traffic is being reflected in an increase in prices – due to unforeseen parking or a greater risk assumed by insurers – in large ports such as Shanghai, where prices for shipping companies have increased by 122% in general between December and last Friday, a percentage that rises to 256% in the case of ships going to Europe.

Another unwanted effect of the virtual closure of the Red Sea and the decrease in capacity in Panama is the prolongation of maritime routes, since It is forcing large shipping companies to circumnavigate South America or Africa with the consequent additional consumption of tons of fuel and impact on greenhouse gases.

Hoffman gave as an example the first effects of the war in Ukraine, reflected in food inflation that was suffered especially by third world countries, and pointed out that, if the current crisis continues, greater global inflation and delays may be taken for granted. in the logistics chain in general like those seen during the covid pandemic.

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