Early 2024 sees sharp drop in Suez, Panama Canal trade: IMF

The International Monetary Fund (IMF) reported a significant drop in trade volume through the Suez and Panama Canals in the first two months of 2024, attributing a 50% decrease in Suez Canal traffic to Houthi assaults in the Red Sea and a 32% fall in Panama Canal trade to drought conditions.

These disruptions are putting a strain on global trade flows, with the Suez Canal’s downturn particularly notable given its role in facilitating around 15% of worldwide maritime commerce. The situation has compelled certain shipping firms to detour via the Cape of Good Hope, resulting in delivery delays exceeding 10 days and posing challenges for businesses with limited stock levels.

Interestingly, the Cape of Good Hope saw a 74% surge in trade volume during this period, while the Panama Canal experienced a near 32% reduction from the previous year. Drought-induced restrictions on ship movements through the Panama Canal since October last year have slowed traffic at this vital trade juncture, through which approximately 5% of the world’s maritime trade passes.

The report also highlighted a 6.7% drop in shipping to 70 sub-Saharan African ports and noted decreases of 5.3% for the European Union and the Middle East and Central Asia, suggesting the impacts of elongated shipping durations.

The IMF warned of potential longer-term consequences if these disruptions persist, including disruptions to supply chains in the impacted regions and inflationary pressures from elevated shipping costs.–Web Desk