For two months of 2024, the volume of trade through the Suez Canal decreased by half, and through the Panama Canal decreased by 32%, which disrupted supply chains and distorted key macroeconomic indicators, the IMF reports in a blog, UNN writes.
Details
In recent months, global trade has reportedly been disrupted by problems on two key sea routes. Attacks on ships in the Red Sea area have caused a reduction in transportation through the Suez Canal, which typically handles about 15% of international maritime traffic. Consequently, some shipping companies have forced their ships to bypass the canal, choosing a route around the Cape of Good Hope. This has resulted in increased delivery times of 10 days or more on average, causing losses for companies with limited inventory.
Also, a severe drought in the Panama Canal has reportedly led to restrictions that have significantly reduced daily ship crossings since October last year. This has led to a slowdown in maritime trade through another key hub that typically carries about 5% of the world's maritime traffic.
Trade disruptions have led to the redirection of cargo from the Suez Canal to the Cape of Good Hope, while trade through the Panama Canal has declined, the IMF blog post notes.
The IMF reports that data from the PortWatch platform shows that trade through the Suez Canal decreased by 50% in the first two months of this year compared to last year, while the Cape of Good Hope saw an increase in trade of about 74%. At the same time, the volume of trade through the Panama Canal decreased by almost 32% compared to the previous year.
The platform also shows that in January and February 2024, the number of calls at 70 sub-Saharan ports tracked in Africa decreased by 6.7% compared to last year. In contrast, the European Union, the Middle East and Central Asia saw a 5.3% decline. These decreases are likely to be the result of temporary delays in delivery due to the length of the route. If these problems continue, there may be temporary disruptions to some supply chains in the affected countries, which could lead to higher inflation (partly due to higher shipping costs).
An important consequence of these problems in maritime transport is that official import (and export) registration statistics based on customs documents may be temporarily affected by changes in ship routes. This will make it difficult to assess the overall dynamics of global trade and economic activity in the coming months.
For example, merchandise trade reports for January in a number of countries in Africa, the Middle East, and Europe may reflect a slowdown in import growth. This may be due to the fact that some goods that would normally be imported in January were actually delivered only in February due to delays in maritime transportation. Also, many low-income countries that depend on import duties (and export taxes) may report lower fiscal revenues in January than expected.
Recall
The Belizean-flagged cargo ship Rubymar, carrying 21 tons of fertilizer, sank in the Red Sea after being attacked by Yemeni Houthis, which could cause an environmental disaster.