The World Bank’s Global Supply Chain Stress Index shows that delayed shipping capacity has more than doubled over the past six months, reaching 1.4 million TEU in May due to disruptions in the Middle East and Mediterranean Sea. Shipping costs also surged by 11% in May 2024, compounding the challenges facing global trade, reports Baltic Exchange.
Consequences
- Shipping Delays: Increased disruptions have shifted stress eastward, with the Middle East and Mediterranean now accounting for over 31% of delayed shipping capacity.
- Rising Costs: Shipping rates rose significantly but remain below their 2022 peak, thanks to increased fleet capacity post-pandemic.
- Geopolitical Tensions: Ongoing geopolitical tensions and key route disruptions are major factors in the supply chain stress.
Regional Impact:
- Middle East and Mediterranean: Sharp increase in shipping disruptions, forcing rerouting and adding strain to global supply chains.
- China and the US: Trade between these two countries has declined, with China now accounting for 11% of total US trade, down from 15.4% in 2018.
Sector Performance:
- Heavy Machinery and Mining: Leading trade growth with a 6% increase in the first four months of 2024.
- Transportation Equipment: Growth slowed from 10.5% in late 2023 to 3.8% in early 2024 due to rising interest rates and prices.
- Fuel Trade: Decline improved to 12.9%, better than the 19.9% drop in late 2023.
Trade Relationships:
- EU and Russia: Russia’s share of EU trade fell to 1.4% due to sanctions, while the US increased its share to 16.6%.
- Reshoring and Friend-shoring: Efforts to reduce reliance on China, with the US strengthening trade ties with Mexico, Canada, and the EU.
The World Bank remains cautiously optimistic about future global trade growth, despite persistent challenges and uncertainties.
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Source: Baltic Exchange
