Trade volume through Suez, Panama canals down sharply in early 2024: IMF

The International Monetary Fund (IMF) said Thursday that in the first two months of 2024, the transit trade volume through the Suez Canal dropped by 50% from a year earlier, while trade volume through the Panama Canal fell by 32% due to Houthi attacks in the Red Sea and drought, respectively, Azernews reports, citing Anadolu Agency.

Recent disruptions in key shipping routes have hindered global trade, the IMF said in a blog post.

Attacks by Yemen’s Houthis on vessels in the Red Sea area have reduced traffic through the Suez Canal, which typically handles about 15% of global maritime trade.

Consequently, some shipping companies have rerouted their vessels around the Cape of Good Hope, leading to extended delivery times of over 10 days on average and negatively impacting companies with limited inventories.

The article noted that trade volume in the Cape of Good Hope increased by 74% during the same period.

Trade volume in the Panama Canal also decreased by almost 32% compared with the prior year.

A severe drought at the Panama Canal has forced authorities to impose significant restrictions on daily ship transits since October last year, slowing down maritime trade at a critical point where about 5% of global maritime trade passes through.

The article said there was a 6.7% decrease in voyages to 70 ports in sub-Saharan Africa in the first two months of the year compared to the previous year and the corresponding declines for the European Union and the Middle East and Central Asia were 5.3%.

These declines likely reflect the temporary effects of prolonged shipping times.

"If continued, the ripple effects of these disruptions could temporarily hamper some supply chains in affected countries and cause upward pressure on inflation (in part due to higher shipping costs)," it warned.