The trade volume was diverted from Suez to route around South African Cape of Good Hope, the International Monetary Fund reports
The Suez and Panama Canals have seen drops in trade of 50% and 32% respectively during January and February, compared with the same months in 2023, the International Monetary Fund (IMF) is reporting.
According to the fund’s information, transit trade fell in the first two months of 2024 due to Houthi attacks in the Red Sea and to drought affecting the Panama Canal.
Meanwhile, trade volume via the Cape of Good Hope, the most South-Western point of the African continent, went up by 74% in that same period.
Attacks on vessels in the Red Sea region decreased traffic via the Suez Canal, a vital route between Asia and Europe that ordinarily handles about 15% of global maritime trade. Consequently, numerous shipping firms rerouted vessels around the Cape of Good Hope, lengthening average delivery times by over ten days.
A pronounced drought affecting the Panama Canal has compelled authorities to implement substantial limitations on daily ship transits since last October, impeding maritime trade at a crucial juncture where normally about 5% of global maritime trade traverses between the Atlantic and Pacific Oceans.
Such measures have negatively impacted companies with constrained inventories, the IMF said.
The organization cautions against the potential impact of these disruptions on inflation rates due to rising shipping costs, as well as complications in global trade and economic activity statistics.
“If continued, the ripple effects of these disruptions could temporarily hamper some supply chains in affected countries and cause upward pressure on inflation [due to higher shipping costs],” it advised.
Reports on merchandise trade for January in Africa, the Middle East, and Europe have indicated a deceleration in import growth as a result of these problems in trading.
