The United Nations Conference on Trade and Development (UNCTAD) raised concerns on January 25, stating that global trade is facing disruptions due to a combination of factors. Attacks by Yemen’s Houthi rebels in the Red Sea, the ongoing war in Ukraine, and low water levels in the Panama Canal are contributing to shipping challenges.
The Houthi attacks have prompted major players in the shipping industry to temporarily avoid the Suez Canal, a critical route connecting the Mediterranean and Red Seas. The UNCTAD estimates a 42% drop in trade volume through the Suez Canal in the last two months. Geopolitical tensions, including the Russia-Ukraine conflict, have reshaped oil and grain trade routes, while severe drought has significantly lowered water levels in the Panama Canal. These disruptions are affecting shipping costs, energy prices, and food costs, raising concerns about inflation risks globally.