Developing Nations Vulnerable to Red Sea Crisis: UNCTAD

 Chennai: With Suez and Panama canal transits dropping more than 40 per cent, developing countries are particularly vulnerable to the trade disruptions, finds UN’s trade body.

UNCTAD estimates that transits passing the Suez Canal decreased by 42 per cent compared to its peak. With major players in the shipping industry temporarily suspending Suez transits, weekly container ship transits have fallen by 67 per cent, and container carrying capacity, tanker transits, and gas carriers have experienced significant declines. Meanwhile, total transits through the Panama Canal plummeted by 49 per cent compared to its peak.

Growing significantly since November 2023, the surge in the average container spot freight rates registered the highest-ever weekly increase of $500 in the last week of December.

Average container shipping spot rates from Shanghai more than doubled at 122 per cent since early December, growing more than threefold to Europe, and 162 per cent to the United States West Coast.

UNCTAD underscores the far-reaching economic implications of prolonged disruptions in container shipping, threatening global supply chains and potentially delaying deliveries, causing higher costs and inflation. The full impact of higher freight rates will be felt by consumers within a year.

Developing countries are particularly vulnerable to these disruptions and UNCTAD remains vigilant in monitoring the evolving situation.

It emphasizes the urgent need for swift adaptations from the shipping industry and robust international cooperation to manage the rapid reshaping of global trade. The current challenges underscore the exposure of global trade to geopolitical tensions and climate-related challenges, demanding collective efforts for sustainable solutions, especially in support of countries more vulnerable to these shocks.