UNCTAD Reports Sharp Decline In Suez Canal Freight Amidst Houthi Attacks

• Freight passing through the Suez Canal has nearly halved due to Houthi attacks, causing disruptions, increased costs, and environmental concerns.
• The UN agency UNCTAD reports a 39% decrease in canal usage over the last two months, resulting in a 45% decline in freight tonnage.
• The disruptions follow global trade route challenges, including Russia’s invasion of Ukraine and Panama Canal issues, leading to delays, higher costs, and elevated greenhouse gas emissions.

Disruptions and Environmental Impact

The Suez Canal, a vital shipping lane handling 12-15% of global trade and 25-30% of container traffic, faces significant disruptions, with freight tonnage dropping by 45% due to Houthi attacks. Jan Hoffmann, the head of trade logistics at UNCTAD, expresses concern over the global impact, noting that the disruptions add to challenges from Russia’s invasion of Ukraine and Panama Canal issues. Longer, alternative routes are causing delays, escalating costs, and increasing greenhouse gas emissions as ships navigate detours, contributing to rising pollution levels.

Container Shipments and Potential Consumer Impact

Container shipments through the Suez Canal plummeted by 82% in the week to January 19, compounding challenges for global trade. Jan Hoffmann emphasizes the potential impact on food prices, revealing that about half of the recent price increases are attributed to higher transport costs. While passing on these elevated freight rates to consumers may take time, Hoffmann suggests that consumers in developed countries might eventually witness the effects in their daily lives, affecting various retailers such as Ikea and Walmart, though the timeframe for such impacts could extend up to a year.

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Source: News Sky

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