After the Covid-19 crisis, many had hoped that global supply chains would return to normal. The World Trade Organization initially expected global trade to recover in 2024, but then abruptly reversed its forecast due to “increased geopolitical tensions, disturbances in the Red Sea and disruptions in the Panama Canal due to climate change.”
Fear of stranding
On March 21, the Panama Canal Authority (ACP) announced that it plans to complete its assessment of the risks posed by climate change by the end of 2024. The water shortage caused by the drought that has lasted for months has forced the agency to reduce the number of ships allowed to pass through the canal, at times down to 24 ships/day (from 39 ships/day).
Ships and boats lining up at the Panama Canal emerged shortly after the World Meteorological Organization (WMO) confirmed the start of El Niño. Peter Sands, head of air and sea freight traffic analysis at the Xeneta platform, said shipping bottlenecks can happen anywhere, but catastrophic incidents like the 2021 Suez Canal blockage have highlighted the vulnerability of this form of transportation.
In March 2021, the Ever Given - the world's largest container ship, ran aground for nearly a week in the Suez Canal, blocking all traffic through one of the world's busiest commercial shipping routes, causing widespread disruptions between Europe, Asia and the Middle East. An estimated $9 billion worth of goods are stuck at the Suez gateway every day due to the Ever Given incident.
Analysts also warn that extreme weather events caused by climate change are also increasing the frequency of incidents like the Ever Given incident, with far-reaching consequences for supply chains, food security and regional economies. In addition to the Panama Canal, many other waterways, such as the Rhine River that flows through Germany and several European Union cities to Rotterdam, Netherlands, have also recorded low water levels for several years, causing ships to lose capacity and increasing transportation costs.
Resolve stress and conflict
Following the impacts of the Covid-19 pandemic, the Russia-Ukraine conflict, and the current widespread conflict in the Middle East, Houthi attacks on cargo ships in the Red Sea have dealt another blow to the global trade sector. Since late 2023, Houthi forces in Yemen have increased their attacks on cargo ships linked to Israel traveling through the sea route connecting Asia with Europe and the United States in an attempt to pressure Israel to stop its military campaign in Gaza.
Concerned about the attacks, ships have been diverting from the Suez Canal to longer routes around the Cape of Good Hope. In late January, the United Nations Conference on Trade and Development (UNCTAD) released a report saying that cargo traffic through the Suez Canal had dropped by 45% in the two months since the Houthi attacks. UNCTAD warned of higher inflation, food insecurity and increased greenhouse gas emissions as freight rates rise as cargo ships reroute to avoid attacks, resulting in longer journeys and higher fuel consumption.
The international community affirms the need to enhance mutual trust, self-restraint in conducting activities that may complicate or escalate disputes; to resolve disputes by peaceful means, to ensure a stable sea area and serve commercial purposes. With a trade value of about 5.3 trillion USD, countries in the region and the world all agree that freedom of navigation and aviation in the East Sea - an important route for global trade and connectivity - must be prioritized for protection.
On February 14, in an exclusive interview with India's ANI news agency, ASEAN Secretary General Dr. Kao Kim Hourn emphasized that ASEAN member states have a common approach to issues related to the East Sea. Mr. Kao Kim Hourn mentioned the ongoing negotiations on the Code of Conduct in the East Sea and said that ASEAN is considering ways to manage the situation in the East Sea.
DO VAN compiled
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