Current:Home > MarketsUN: Global trade is being disrupted by Red Sea attacks, war in Ukraine and low water in Panama Canal -ThriveEdge Finance
UN: Global trade is being disrupted by Red Sea attacks, war in Ukraine and low water in Panama Canal
View
Date:2025-04-18 23:38:17
UNITED NATIONS (AP) — The U.N. trade body sounded an alarm Thursday that global trade is being disrupted by attacks in the Red Sea, the war in Ukraine, and low water levels in the Panama Canal.
Jan Hoffmann, a trade expert at the United Nations Conference on Trade and Development known as UNCTAD, warned that shipping costs have already surged and energy and food costs are being affected, raising inflation risks.
Since attacks by Yemen’s Houthi rebels on ships in the Red Sea began in November, he said, major players in the shipping industry have temporarily halted using Egypt’s Suez Canal, a critical waterway connecting the Mediterranean Sea to the Red Sea and a vital route for energy and cargo between Asia and Europe.
The Suez Canal handled 12% to 15% of global trade in 2023, but UNCTAD estimates that the trade volume going through the waterway dropped by 42% over the last two months, Hoffmann said.
Since November, the Iranian-backed Houthis have launched at least 34 attacks on shipping through the waterways leading to the Suez Canal. The Houthis, a Shiite rebel group that has been at war with a Saudi-led coalition backing Yemen’s exiled government since 2015, support the Palestinians and have vowed to keep attacking until the Israel-Hamas war ends.
The United States and Britain have responded with strikes against Houthi targets, but the rebels have kept up their attacks.
Hoffmann, who heads the trade logistics branch at Geneva-based UNCTAD, told a video press conference with U.N. reporters that the Houthi attacks are taking place at a time when other major trade routes are under strain.
The nearly two-year war since Russia’s Feb. 24, 2022 invasion of Ukraine and other geopolitical tensions have reshaped oil and grain trade routes i ncluding through the Black Sea, he said.
Compounding difficulties for shipping companies, Hoffmann said, severe drought has dropped water levels in the Panama Canal to their lowest point in decades, severely reducing the number and size of vessels that can transit through it.
Total transits through the Panama Canal in December were 36% lower than a year ago, and 62% lower than two years ago, Hoffmann said.
Ships carry around 80% of the goods in world trade, and the percentage is even higher for developing countries, he said.
But the Red Sea crisis is causing significant disruptions in the shipment of grains and other key commodities from Europe, Russia and Ukraine, leading to increased costs for consumers and posing serious risks to global food security, Hoffmann said.
This is specially true in regions like East Africa, South Asia, Southeast Asia and East Asia, which heavily rely on wheat imports from Europe and the Black Sea area, he said.
Hoffmann said early data from 2024 show that over 300 container vessels, more than 20% of global container capacity, were diverting or planning alternatives to using the Suez Canal. Many are opting to go around the Cape of Good Hope in Africa, a longer and more costly trip.
Hoffmann said ships transporting liquified natural gas have stopped transiting the Suez Canal altogether because of fears of an attack.
As for costs, he said, average container shipping spot rates from Shanghai have gone up by 122% since early December, while rates from Shanghai to Europe went up by 256% and rates to the U.S. west coast by 162%.
“Here you see the global impact of the crisis, as ships are seeking alternative routes, avoiding the Suez and the Panama Canal,” Hoffmann said.
veryGood! (46)
Related
- Bill Belichick's salary at North Carolina: School releases football coach's contract details
- Boeing announces purchase of Spirit AeroSystems for $4.7 billion in stock
- Inside Khloe Kardashian's Dollywood-Inspired 40th Birthday Party With Snoop Dogg
- Shaboozey Shoots His Shot on an Usher Collab
- Skins Game to make return to Thanksgiving week with a modern look
- Baseball Hall of Famer Orlando Cepeda dies at 86
- Top California Democrats announce ballot measure targeting retail theft
- Biden is making appeals to donors as concerns persist over his presidential debate performance
- Toyota to invest $922 million to build a new paint facility at its Kentucky complex
- Lorde, Charli XCX’s viral moment and the truth about friendship breakups
Ranking
- B.A. Parker is learning the banjo
- 11 people injured when escalator malfunctions in Milwaukee ballpark after Brewers lose to Cubs
- BET Awards 2024: See the Complete List of Winners
- Look Back at Lala Kent and Daughter Ocean's Sweet Bond Before She Gives Birth to Baby No. 2
- NHL in ASL returns, delivering American Sign Language analysis for Deaf community at Winter Classic
- Arizona man gets life sentence on murder conviction in starvation death of 6-year-old son
- BET Awards return Sunday with performances from Lauryn Hill, Childish Gambino, Will Smith and more
- NY police shoot and kill 13-year-old boy in Utica. Protests erupt at city hall
Recommendation
Newly elected West Virginia lawmaker arrested and accused of making terroristic threats
Lorde, Charli XCX’s viral moment and the truth about friendship breakups
Second U.S. service member in months charged with rape in Japan's Okinawa: We are outraged
Lorde, Charli XCX’s viral moment and the truth about friendship breakups
Average rate on 30
Florida Panthers celebrate Stanley Cup with parade, ceremony in rainy Fort Lauderdale
Jessica Alba's Daughters Honor and Haven Wear Her Past Red Carpet Dresses in Rare Outing
How ratings for first presidential debate of 2024 compare with past debates