UN Sounds Alarm On Panama, Ukraine & Red Sea
A UN trade body spokesperson sounded an alarm last week, warning that the Panama Canal drought, the war in Ukraine, and Red Sea attacks are impacting shipping and affecting energy and food costs, raising the risks of further inflation.
The lake that allows the Panama Canal to function recorded the lowest water level ever for the start of a dry season this year, and the UN duly noted that total transits through the waterway in December were 36% lower than a year ago, and 62% lower than two years ago.
They also referenced Russia’s invasion of Ukraine, which commenced almost two years ago, and how geopolitical tensions have reshaped oil and grain trade routes including through the Black Sea.
With major trade routes already under strain, the UN added that many carriers have now temporarily halted using the Suez Canal, a critical waterway connecting the Mediterranean Sea to the Red Sea and a vital route for energy and cargo between Asia and Europe.
The Suez Canal handled 12% to 15% of global trade in 2023, but the UN estimate that the volume passing through it has dropped by 42% during the last two months and since the Iranian-backed Houthis have been launching attacks on commercial shipping in the Red Sea. Despite US and British air strikes against Houthi targets, the rebels have continued their attacks.
The spokesperson highlighted how the Red Sea crisis in particular is causing significant disruptions to the shipping of grains and other key commodities, which is leading to increased costs for consumers and posing serious risks to global food security.
