UNCTAD logistics chief warns red sea attacks a ‘dramatic’ impact on global trade, supply chains

Anjali Sharma

GG News Bureau
UNITED NATIONS, 26th Jan. UNCTAD Chief of Trade Logistics Jan Hoffmann on Thursday said that the attacks against shipping in the Red Sea by Houthis are devastating for global trade and supply chains, already under the impacts of the war in Ukraine and climate change-linked conditions in the Panama Canal.

Jan Hoffmann noted that the attacks are not only adding to geopolitical tensions but also raising costs and leading to increased greenhouse gases emissions.

“Maritime transport is really the lifeline of global trade,” he told reporters in New York via video link from Geneva.

“These disruptions underline their vulnerability to geopolitics, tensions, and climate changes.”

Ansar Allah, Houthi rebels control large parts of Yemen, including the Red Sea coast, UNCTAD said.

The agency noted that they have intensified attacks against ships passing through the narrow waters towards the Suez Canal, claimed they have been targeting those heading to Israeli ports.

United States and the Great Britain and other countries, launched airstrikes against the Houthi group at sea and now on land, increasing tensions in the region.

The Suez Canal is a vital link for international shipping and accounts for between 12 and 15 percent of global trade and about 20 percent of container trade, UNCTAD said.

The agency noted that the disruptions have a catastrophic, cascading effect worldwide, during the March 2021 grounded of the vast Ever Given container ship which blocked the waterway for days.

UNCTAD reported that ships are avoiding the route, traveling around the much longer passage around the southern tip of Africa to avoid the risk of attacks.

According to UNCTAD, container ship transits are down 67 per cent compared to a year ago. The largest impact is on liquefied natural gas carriers, which have stopped altogether since 16 January.

It added that prior to the crisis, 2 or 3 gas carriers used to pass through the region daily.

The challenges came back of pre-existing disruptions to global trade caused by the war in Ukraine and the abnormally low water levels in the Panama Canal due to climate change impacts.

UNCTAD stated that low water levels have caused a decrease of 36 percent in ship transits compared to a year ago and are almost 62 percent down on two years ago.

Mr. Hoffmann said the impacts have been “dramatic,” pointed to a surge in average container spot rates.

The agency emphasized that average shipping cost rates from Shanghai have doubled since early December 2023, and the Europe over tripled, and US west coast also increased “even though they don’t go through the Suez Canal”.

He highlighted that “We are seeing multiple impacts.”

Mr. Hoffmann warned of rising costs, potential inflation, global delays and disruptions, and worsening of climate change contributors.