Red Sea shipping crisis to affect global trade, warns UNCTAD

The United Nations Conference on Trade and Development (UNCTAD) has raised alarm over the disruption in global trade due to the ongoing crisis in the Red Sea shipping route stating that it would “particularly” hurt developing nations and warned that it is impacting global food prices with longer cargo travel distances and higher freight rates potentially leading to higher costs.

“Disruptions in grain shipments from Europe, the Russian Federation and Ukraine pose risks to global food security, affecting consumers and lowering the prices paid to producers,” UNCTAD said.

It expressed “profound concerns” over the escalating disruptions in global trade, particularly stemming geopolitical tensions affecting shipping in the Black Sea, recent attacks on shipping in the Red Sea affecting the Suez Canal and the impact of climate change on the Panama Canal as maritime transport is responsible for over 80% of the global movement of goods.

“Developing countries are particularly vulnerable to these disruptions, and UNCTAD remains vigilant in monitoring the evolving situation,” UNCTAD’s head of trade logistics, Jan Hoffmann said.

The recent attacks on Red Sea shipping, coupled with existing geopolitical and climate-related challenges, have given rise to a complex crisis affecting key global trade routes. UNCTAD estimated that the weekly transits going through the Suez Canal decreased by 42% over the last two months.