Trade Under Pressure: Global Trading Route Disruptions

Maritime shipping serves as the invisible backbone of modern economies. Nearly 90 percent of global trade depends on it, and disruptions do not just stall products. They can send shockwaves through economies, strain diplomatic ties, and trigger crises in supply and demand across every sector. Today, climate stress, rising regional instability, and outdated infrastructure are converging to choke some of the world's most critical shipping corridors.

The Panama Canal has long connected the Atlantic and Pacific with efficiency, but it is being strangled by drought. The canal relies on Gatun Lake, a manmade freshwater reservoir, to lift and lower ships through its lock system. Over the past two years, rainfall in Panama has been significantly below average. By late 2024, canal authorities slashed the number of daily transits, and some of the largest ships were forced to take the long route around South America. This added weeks to deliveries and increased freight costs for cars, food, electronics, and medicine. Developing countries dependent on imports are being priced out of essential goods. The crisis illustrates how climate is not just a weather problem—it is a logistical one. The Panama Canal’s viability is now deeply uncertain unless water conservation or alternative shipping mechanisms are devised.

The Suez Canal, connecting Europe and Asia, continues to face strategic threats. In 2021, the grounding of the Ever Given (a container ship) demonstrated how a single mishap can clog the global system. But in recent years, piracy and missile attacks in the Red Sea have become a more persistent threat. The Houthi movement in Yemen has targeted cargo ships with drones and rockets, prompting many carriers to reroute via the Cape of Good Hope. This journey can add thousands of miles, delay deliveries by over two weeks, and increase fuel use by as much as 25 percent. The ripple effects extend to shipping container availability, inflation in consumer goods, and escalating naval standoffs among the U.S., Saudi Arabia, and Iran. The economic drain is matched by the danger of any spark igniting a wider regional war.

In the Persian Gulf, the Strait of Hormuz remains a narrow funnel through which 20 percent of the world’s oil passes. Iran’s dominance over this chokepoint has allowed it to use the strait as geopolitical leverage. Following renewed Western sanctions in early 2025, tanker harassment and drone sightings intensified, driving oil prices up by double digits in a matter of weeks. Though no ships have been sunk, insurance costs have surged, and energy-importing countries have been forced to consider alternative routes and suppliers. The economic effects are immediate, but the long-term shift in energy trade could permanently realign global alliances and accelerate moves toward necessitated decarbonization.

These flashpoints reveal a dangerous over-dependence on a few fragile arteries. The world’s logistics network lacks redundancy. Ports in West Africa, Southeast Asia, and South America are underdeveloped. Inland transportation alternatives are decades behind schedule. For supply chains to remain resilient in a more volatile future, governments and corporations must invest in multiple layers of infrastructure, diversify trade routes, and transition to more regional production models. This is a crucial challenge to economic efficiency, as well as to security and stability.

Sources:

International Energy Agency. The Climate Risk to Maritime Infrastructure. IEA, 2024, www.iea.org/reports/the-climate-risk-to-maritime-infrastructure. 

“Red Sea Shipping Attacks and Their Global Fallout.” Al Jazeera, 11 Mar. 2025, www.aljazeera.com/news/2025/3/11/red-sea-shipping-attacks-and-their-global-fallout. 

“Tensions in the Strait of Hormuz Disrupt Oil Supply Chains.” Reuters, 3 July 2025, www.reuters.com/markets/commodities/strait-hormuz-tensions-oil-shipping-2025-07-03/. 

Resilient Supply Chains in a Fragmenting World. World Bank, 2025, www.worldbank.org/en/topic/trade/publication/resilient-supply-chains-in-a-fragmenting-world.