Meat & Livestock News

Chaos at Shipping Chokepoints


  • Recent disruptions at key maritime chokepoints, notably the Panama Canal and the Red Sea, have significantly impacted global trade, with severe consequences for agricultural exports.
  • Low water levels in the Panama Canal, due to one of the driest years on record, have reduced its capacity, forcing a shift in shipping routes. Concurrently, Houthi rebel attacks in the Red Sea have heightened risks and costs for maritime trade.

An estimated 80% of global trade relies on maritime transport, making it crucial for the movement of goods across the world. This trade is particularly vulnerable at certain geographic chokepoints, where passage is naturally or artificially narrowed. Recent events have highlighted the fragility of these points, with significant implications for global commerce, especially in the agricultural sector.

The Panama Canal, a vital link between the Atlantic and Pacific oceans, plays a critical role in U.S. trade, with 14% of maritime trade passing through it. In the fiscal year 2023, a significant portion of U.S. agricultural exports utilised this route for efficient access to East Asian markets.

However, the canal’s capacity has been severely hampered by one of the driest years on record, attributed to El Niño. This has led to unprecedented low water levels in Lake Gatun, the canal’s main water source, necessitating drastic reductions in the number of daily transits and imposing restrictions that have directly affected the agricultural sector.

Simultaneously, the Red Sea, another crucial maritime route, has been compromised by Houthi rebel attacks, particularly around the Bab el-Mandeb strait. These attacks have not only posed direct threats to shipping but have also led to a significant increase in marine war risk insurance premiums, making it cost-prohibitive for many to continue using this route. As a result, alternative, longer routes are being considered, further complicating global trade dynamics.

The combined effect of these disruptions has been profound, with a notable shift in shipping patterns and increased costs for exporters, particularly those in the agricultural sector. The Panama Canal Authority is exploring long-term solutions, including the construction of an additional reservoir and significant investment in water management improvements. However, these measures, while necessary, offer little immediate relief.

In the Red Sea, the situation remains tense, with ongoing security concerns and no clear resolution in sight. The implications of these chokepoint disruptions extend beyond immediate trade impacts, affecting global supply chains and highlighting the vulnerability of critical maritime routes to environmental and geopolitical factors.

As the world grapples with these challenges, the resilience of global trade networks is being tested. The situation underscores the need for diversified trade routes and enhanced cooperation among international stakeholders to mitigate the risks associated with choke point disruptions.