Yemen Rebel Attacks Erode Global Trade: Suez Canal Traffic Plummets by Over 40%

World | January 26, 2024, Friday // 11:00
Bulgaria: Yemen Rebel Attacks Erode Global Trade: Suez Canal Traffic Plummets by Over 40%

In a concerning development for global trade, the Suez Canal has experienced a dramatic drop of more than 40% in traffic volume, attributed to repeated attacks by Yemen rebels on merchant ships. The United Nations, through data provided by the UN Conference on Trade and Development (UNCTAD), expresses deep concerns about the implications of these disruptions on worldwide commerce.

Jan Hoffman, the President of UNCTAD, emphasized the gravity of the situation, stating, "We are very concerned that attacks on shipping in the Red Sea will exacerbate global trade tensions and add to existing trade disruptions caused by geopolitics and climate change, making it more serious."

Over the past two months, commercial traffic through the Suez Canal has been redirected to South Africa's Cape of Good Hope due to the Houthi attacks, resulting in a staggering 42% decrease in traffic. The Suez Canal, a vital maritime route connecting the Mediterranean and Red Sea, plays a crucial role in facilitating international trade.

Hoffman highlighted that more than 80% of global trade in goods relies on sea transport, underscoring the Suez Canal's significance as a lifeline for global trade. The UNCTAD data reveals a 67% reduction in the number of container ships passing through the Suez Canal each week compared to the same period last year. As more than 20% of global container trade traverses this route, the impact on container traffic is particularly pronounced.

Large container ships bore the brunt of diversions, exacerbating the decline in container traffic. Oil tanker traffic also saw an 18% reduction, while bulk ship movements, handling grain and coal, experienced a 6% decline. Natural gas transportation remained relatively stable.

The UNCTAD data further indicates that 12% to 15% of global trade, involving approximately 20,000 ships, passes through the Red Sea annually, connecting Europe and Asia. With ongoing disruptions in other international maritime trade routes, including restrictions in the Black Sea due to Russia's invasion of Ukraine and reduced traffic in the Panama Canal due to drought in Central America, the UN warns of potential long-term disruptions to major trade routes. This could lead to considerable challenges in global supply chains, resulting in delivery delays, increased costs, and the possibility of inflation.

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Tags: Suez Canal, Yemen, trade, Houthi

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