In today’s interconnected world, where goods flow seamlessly across continents, the vast area of the world’s oceans serves as the ultimate highway of global trade. Maritime chokepoints are vital passages connecting oceans and seas, facilitating global trade and globalisation, their importance is emphasised by the lack of alternative routes if normal traffic were to be obstructed. From ancient times to the present day, mastery over these waters has remained a timeless pursuit and indicator of geopolitical and economic relevance. Currently, there are eight primary choke points around the globe, many of which border developing countries or territories facing constant international security issues such as terrorism threats. Right now, more than half of the world’s maritime trade is at threat of disruption due to ongoing conflicts in some key areas of the world. This raises immediate concern for the functioning of international supply chains, putting food security, energy supply and the global economy at increasing risk.
Figure 1: A map of the world’s major maritime chokepoints and sea trade routes.
Figure 2: The graph shows a clear dip in Panama and Suez canal transits starting in 2023.
After the economic stagnation caused by the COVID-19 pandemic, maritime trade appeared to embark on a steady recovery process in 2023, with growth rates reaching around 2.3%. However, prospects for the future seem dim, besides the threat of ongoing conflicts, there is also disruption caused by climate change affecting many sea lines of communication. As the United Nations Conference on Trade and Development (UNCTAD) puts it in its most recent review of maritime transport: “Key chokepoints like the Suez and Panama Canals are increasingly vulnerable to geopolitical tensions, conflicts and climate change.” Diversion onto longer routes means that freight rates can only increase due to factors such as higher fuel consumption, extended transit times and additional labour, all of which compound the logistical and financial burdens on global supply chains. Not to mention the environmental impact of the boost in emissions created by increased travel distance, which translates into a further increase in costs under the European Union’s Emissions Trading System (ETS). The ETS is a cap and trade system implemented in 2005; it is designed to reduce greenhouse gas emissions through a ‘carbon market’ where companies must purchase (or trade) emission allowances to cover their environmental impact. Since January 2024, the EU ETS has been extended to cover the maritime sector, meaning that shipping companies must purchase allowances to cover the CO₂ emissions of all vessels entering EU ports. For international routes between EU ports and non-EU ports, the ETS applies to 50% of the emissions generated during the voyage. For vessels on the Far East-Europe route, this could still mean about $400,000 in extra costs under the scheme.
Since the start of the war between Israel and Hamas in late 2023, tensions have spread throughout the Middle East. The Bab el Mandeb Strait is a primary waterway for oil and natural gas connecting the Red Sea to the Mediterranean through the Suez Canal. The strait accounts for 12% of global maritime trade, but for the past few months, its waters have been paralysed. The Houthis are a political and military group that controls the North Western part of Yemen, recently, they have started targeting many commercial ships heading toward the Mediterranean, particularly to Israel. Houthis have taken advantage of their geographic position over the strait to show support for Hamas. However, this has destabilised the delicate balance of international trade networks. Many commercial ships have been rerouted and are now forced to travel around Africa and through the Cape of Good Hope. For vessels heading to Europe, this rerouting significantly prolongs their journey by approximately 10 to 15 days. These developments expose Europe to rising costs due to its dependence on imports from Asia, while many developing countries also heavily rely on the Suez Canal for their foreign trade.
Meanwhile, in the Panama Canal, the problem is mainly an environmental one. This artificial waterway is a shortcut connecting the Atlantic Ocean with the Pacific Ocean and is primarily used by the United States and China for containerised trade as well as trade in cars, grain and gas. While recent rainfall has improved conditions, a long period of drought due to climate change has caused the Panama government to halt a lot of ships from transiting in the canal or operating the canal at limited capacity. Although water levels in the canal’s reservoirs are beginning to recover, the long-term impacts of climate change remain a pressing concern, as fluctuations in weather patterns could lead to future droughts.
The Bosporus and Dardanelles Straits, often referred to as the Turkish Straits, have long been a pivotal maritime gateway connecting the Black Sea and the Mediterranean. Historically, these straits have held immense strategic importance in the region’s geopolitical dynamics, for centuries, Russia’s foreign policy was driven by the desire to access warm-water ports through these straits. Today, they are controlled by Turkey and are crucial for the transport of oil and grain, making their stability a Turkish concern but also an international one. Due to the Russian-Ukrainian war, which erupted in 2022, the Black Sea has become a contested area. The straits have been periodically closed off along with some key ports in the area, such as the Odesa commercial port, leading to a disruption of trade routes and having a particularly negative impact on Ukrainian exports. Several countries have shifted their focus eastwards and now import grain from Brazil or the US instead of Ukraine. In Europe, the main concern has been energy security; threats were exacerbated by the disruption of gas and oil supplies from Russia once reaching Europe through the Black Sea, prompting many nations to reevaluate their energy strategies to address the soaring costs.
Rerouting ships onto longer routes is triggering market inefficiencies and overwhelming many ports with congestion and delays. What does this mean for consumers? The situation created by the above-mentioned threats to maritime chokepoints has increased the cost of transporting goods. When freight rates rise and companies face higher shipping costs, it directly contributes to cost-push inflation. To maintain profit margins, companies pass on elevated costs to consumers in the form of higher prices, particularly in industries which rely heavily on transportation, such as food, retail and manufacturing. UNCTAD predicts that the global consumer price levels will increase by 0.6% by the end of 2025 as a result of the recent freight rate hikes caused by the Red Sea crisis and Panama Canal disruption. The ones who will suffer the most are less developed countries, particularly small island nations; the negative impact is amplified by their heavy reliance on maritime trade and limited ability to replace imported goods with domestic products. As global trade becomes increasingly intertwined with geopolitical dynamics, policymakers and international organisations must collaborate to address the vulnerabilities of key chokepoints. Without proactive measures, disruptions in maritime trade will continue to impact consumers and economies worldwide.
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