The United Nations Conference on Trade and Development (UNCTAD) has raised concerns about the escalating threats to global trade, spotlighting issues ranging from the Black Sea region to the Suez and Panama Canals, and recent security concerns in the Red Sea. In a recent statement, UNCTAD expressed deep concern over the growing disruptions in global trade, especially in the wake of a missile attack by Houthis on a product tanker in the Red Sea, which ignited new apprehensions within the energy sector.
UNCTAD stressed the significant economic consequences of these disruptions, noting that developing countries are especially at risk. The organization is closely monitoring the situation and has called for immediate adjustments within the shipping industry and enhanced international collaboration to address the rapidly changing dynamics of global trade.
The statement by UNCTAD points to a “perfect storm” of disruptions worldwide, including the ongoing conflict in Ukraine, which is approaching its second year and has led to major shifts in oil and grain trades, affecting established trading patterns. These issues, combined with other global concerns, are having a notable impact on global food prices.
Furthermore, UNCTAD highlighted the severe decline in transits through the Panama Canal, attributing a 36 percent reduction in December compared to the previous year to climate change and persistent drought in Panama. The organization also shed light on the crisis in the Red Sea, with Houthi-led attacks creating additional complexities and severely disrupting shipping routes.
According to UNCTAD, there has been a significant decrease in containership transits through the Suez Canal, with a 67 percent drop compared to the previous year. The organization had previously indicated that even before the recent Houthi attacks, there was a noticeable decline in tanker and gas shipments passing through the Suez Canal since January 16, estimating a 42 percent decrease in canal transits over the last two months.
Highlighting the importance of maritime transport as the cornerstone of international trade—accounting for over 80 percent of global goods movement—UNCTAD pointed out that the combined disruptions, including those caused by the conflict in Ukraine and reduced water levels in the Panama Canal, are leading to increased prices and posing threats to trade. The organization noted significant increases in shipping costs from Shanghai and to Europe, alongside surging energy prices affecting supplies, particularly in Europe.
UNCTAD warns of the broader implications of these disruptions, such as extended cargo travel distances, higher trade costs, and increased greenhouse gas emissions due to ships having to navigate longer routes at higher speeds.
In conclusion, UNCTAD emphasized the need for collective action to find sustainable solutions to these challenges, highlighting the vulnerability of trade to geopolitical and climate-related issues and underscoring the importance of supporting countries that are more susceptible to these disruptions.
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