Freight transport through the Suez Canal has fallen by 45 per cent in the two months since shipping companies changed routes due to Houthi attacks, according to UN agency UNCTAD.
The United Nations Conference on Trade and Development (UNCTAD), which supports developing countries in global trade, warned of high inflation risks, uncertainty in food security and rising greenhouse gas emissions.

Shipping companies have moved their vessels away from the Red Sea since the Iran-linked Houthi movement, which controls most of Yemen’s populated areas, began attacking ships it claims are supporting Palestinians in Gaza. The US and UK have responded with air strikes against the Houthis.

UNCTAD said 39 per cent fewer ships passed through the Suez Canal than in early December, leading to a 45 per cent drop in freight tonnage.

Jan Hoffmann, UNCTAD’s head of trade logistics, said three major global trade routes were now disrupted, including grain and oil flows since Russia’s invasion of Ukraine and the Panama Canal, where shipments last month were down 36 per cent from a year earlier and 62 per cent from two years ago due to low water levels caused by drought.

“We are very concerned. We are seeing delays, higher costs and higher greenhouse gas emissions,” Hoffmann said.

Emissions are rising because ships are choosing longer routes and travelling faster to compensate for detours, Hoffmann said.

The Suez Canal handles 12-15 per cent of global trade and 25-30 per cent of container traffic. Container shipments through the canal fell by 82 per cent in the week to 19 January compared to early December, with the decline in LNG being even greater. The decline in dry bulk cargoes was smaller, while crude oil tanker traffic showed a slight increase.

Spot container prices recorded their sharpest weekly increase of $500, affecting not only shipments from Asia to Europe but also the non-Suez route to the US west coast, which more than doubled. However, prices were still only half of the peak reached during the Covid-19 pandemic.

Hoffmann said food prices could feel the impact, adding that about half of the increases seen since the war in Ukraine have been due to higher transport costs, but it may take some time for end consumers in developed countries to see the impact.

“It takes up to a year for these higher freight rates to be passed on to consumers,” Mr Hoffmann said, “until we actually see them in the store, whether it’s Ikea, Walmart or whatever store,” he said.