The United Nations Conference on Trade and Development (UNCTAD) has expressed profound concerns over the escalating disruptions in global trade, particularly stemming geopolitical tensions affecting shipping in the Black Sea, recent attacks on shipping in the Red Sea affecting the Suez Canal and the impact of climate change on the Panama Canal.
UNCTAD — the United Nations body that promotes the interests of developing countries in world trade — underscored the "critical role" maritime transport plays as the backbone of international trade, responsible for over 80% of the global movement of goods.
In a new statement, the UNCTAD noted the trade disruption in the Black Sea, the Panama Canal and the Suez Canal routes.
It said that the recent attacks on Red Sea shipping, coupled with existing geopolitical and climate-related challenges, have given rise to a "complex crisis affecting key global trade routes."
Suez Canal transits dropped by 42%
UNCTAD estimates that the weekly transits going through the Suez Canal decreased by 42% over the last two months.
"The ongoing conflict in Ukraine has triggered substantial shifts in oil and grain trades, reshaping established trade patterns. Simultaneously, the Panama Canal, a pivotal conduit for global trade, is grappling with diminished water levels, resulting in a staggering 36% reduction in total transits over the past month compared to a year ago," it said.
"The long-term implications of climate change on the canal's capacity are raising concerns about enduring impacts on global supply chains," it added.
UNCTAD further said that the crisis in the Red Sea, marked by Houthi-led attacks disrupting shipping routes, has added another layer of complexity — with major players in the shipping industry having temporarily suspended Suez transits in response.
Notably, the report said container ship transits per week have plummeted by 67% compared to a year ago, with container carrying capacity, tanker transits, and gas carriers experiencing significant declines.
"The surge in the average container spot freight rates during the last week of December, by plus 500 dollars in one week, was the highest-ever weekly increase," the UNCTAD report said.
Average container shipping spot rates from Shanghai this week are up by 122% compared to early December.
The report noted that rates from Shanghai to Europe went up by 256%.
Rates to the United States West Coast also increased above average, although they do not go through Suez. They increased by 162%.
"Here we see the global impact of the crisis, as ships are seeking alternative routes, avoiding the Suez and the Panama Canal," UNCTAD said.
"The cumulative effect of these disruptions translates into extended cargo travel distances, escalating trade costs, and a surge in greenhouse gas emissions from shipping having to travel greater distances and at greater speed."
The UNCTAD pointed out that avoiding the Suez and Panama Canal necessitates more days of shipping, resulting in increased expenses.
It said that the price per day of shipping and insurance premiums have surged, compounding the overall cost of transit.
Additionally, ships are compelled to travel faster to compensate for detours, burning more fuel per mile and emitting more CO2, further exacerbating environmental concerns.
Global implications: increases in food, energy prices
UNCTAD also underscored the far-reaching economic implications of these disruptions.
It said that prolonged interruptions, particularly in container shipping, pose a direct threat to global supply chains, potentially leading to delayed deliveries and heightened costs.
"While current container rates are approximately half of the peak during the Covid crisis, passing on higher freight rates to consumers takes time, with the full impact expected to manifest within a year," the report added.
It said that the crisis is also reverberating in global food prices, with longer distances and higher freight rates potentially cascading into increased costs.
