Market history · Infrastructure ·
Red Sea attacks send shipping the long way round
From late 2023, attacks on merchant ships in the Red Sea by Houthi forces led the large container lines to pause or reroute voyages through the Suez Canal. The International Monetary Fund reported in March 2024 that Suez Canal trade volume was down about 50% year on year in January and February, while transits around the Cape of Good Hope were up by an estimated 74%.
The Suez Canal normally carries roughly 15% of world maritime trade. Going around Africa added ten days or more to delivery times on average, raising costs for shippers and strain for ports and insurers. The IMF noted that the Panama Canal was meanwhile hit by drought, so two of the world's main trade chokepoints were constrained at the same time.
For investors in ports, shipping, logistics and commodity trade, the episode illustrated how a small number of narrow waterways concentrate risk for global trade.
The takeaway
Global trade depends on a few chokepoints. Disruption there raises costs for shipping, logistics and everything that travels by sea.
Sources
This is a retrospective about a past event, provided for general information. It is not investment advice, does not describe RockLake's positioning at the time, and past performance is not a guide to future performance. Read the risk warning.