Geneva: Europe and the Arabs
An official at the United Nations Conference on Trade and Development (UNCTAD) expressed the organization's concern that attacks on ships in the Red Sea are increasing costs on global trade and exacerbating trade disruptions resulting from geopolitical tensions and the effects of climate change.
This came during a press conference held via video technology from Geneva, in which Jan Hoffmann, Head of the Trade Facilitation Department, said that the impact of the war in Ukraine and the decline in transport traffic through the Panama Canal due to the drop in fresh water levels, in addition to the situation in the Red Sea region, are leading to a delay in Sea freight, higher costs and increased greenhouse gas emissions.
More than 80 percent of goods in international trade are transported by sea - and the proportion is even higher for most developing countries - making maritime transport “the lifeline of global trade,” according to the UNCTAD official. According to what was stated in the United Nations news bulletin, a copy of which we received on Friday morning
Dramatic consequences
The consequences of the Red Sea crisis on shipping costs “have been dramatic,” Hoffman said, and it has also had a major impact on the use of the Suez Canal — which handles approximately 12 to 15 percent of global trade. He pointed out that since November, huge international shipping companies have temporarily refrained from transiting through the Suez Canal and preferred to move around South Africa (Cape of Good Hope), which led to a decrease in revenues for Egypt and increased pressure on the ports that receive the transferred ships.
Container shipping through the canal decreased by 67 percent compared to the same period last year, while gas tankers completely stopped their operations for fear of being exposed to strikes in the Red Sea. As a result, shipping costs have risen dramatically – those who want to ship have to pay for more fuel, days at sea, and higher insurance costs, among other costs.
“Prolonged disruptions, especially in container shipping, would threaten and disrupt global supply chains leading to delayed delivery of goods, increased costs, and potential inflation,” the UNCTAD official said.
While global shipping rates have only increased by half of what they were during the peak of the Covid-19 crisis as a result of the triple challenge facing the sector, he noted that it will take time for these higher shipping rates to reach consumers, and may not appear in stores for a while. Up to a year. He added that energy prices have already risen, and food prices may be affected again around the world.
Hoffman stressed that UNCTAD remains concerned about the situation of maritime shipping and global trade and will continue to monitor the impact of these disturbances, especially for developing countries. He stressed that it confirms the vulnerability of trade to geopolitical challenges, tensions and climate challenges, and will require rapid adaptations from the shipping industry.
The United Nations Conference on Trade and Development (UNCTAD) is the leading United Nations institution dealing with trade and development. UNCTAD supports developing countries in accessing the benefits of a globalized economy more equitably and effectively