The risk of disruption to trade routes is growing, which could affect global food supply and cause price spikes, according to new research.
Analysts at the Chatham House thinktank have identified 14 “chokepoints” (listed below) including the Suez Canal, Black Sea ports and Brazil’s road network, almost all of which are already hit by frequent disruptions. Little is being done to ease these disruptions, which leads analysts believe will worsen in years to come. Over half of the world’s staple crop exports – wheat, maize, rice and soybeans – have to travel via inland routes to key ports in the US, Brazil and the Black Sea. In addition, more than half of these crops – and over half of all fertilisers – transit through at least one of the maritime chokepoints identified.
One particular threat to global food supplies is extreme weather. Climate change is bringing more storms, droughts and heatwaves, which can block chokepoints and damage ageing infrastructure. It is also likely to fuel armed conflicts, which can also shut down trade bottlenecks, the report said. “We are talking about a huge share of global supply that could be delayed or stopped for a significant period of time,” said Laura Wellesley, one of the authors of the Chatham House report, quoted by The Guardian.
“What is concerning is that, with climate change, we are very likely to see one or more of these chokepoint disruptions coincide with a harvest failure, and that’s when things start to get serious.”
Extreme weather has already caused disruption on the Panama Canal, which has experienced drought, while the Suez Canal has been closed by sandstorms. The Egypt-run waterway has also been threatened by terrorist bomb attacks.
Inland waterways and railways in the US, which carry 30% of the world’s maize and soy, were hit by flooding in 2016 that halted traffic. A heat wave in 2012 kinked rail lines and caused train derailments. The regions most vulnerable to trade disruptions are Middle East and North Africa region, the report found. The region has the highest dependency on food imports in the world and is encircled by maritime bottlenecks. It also depends heavily on wheat imports from the Black Sea.
Countries especially at risk from disruption are poorer nations reliant on imports such as Ethiopia, Kenya, Tanzania and Sudan, as well as richer nations like Japan and South Korea, according to the report. China is also a major importer but it has done the most to mitigate its exposure to chokepoint risk, the report found. It has diversified its supply routes, such as building a railway across South America to decrease its reliance on the Panama Canal. Chinese companies also own and operate ports around the world.
The report is sobering reading and reminder that we should value the food we eat and consider the impact we make on the environment. But, for the shipping industry, it also underlines our crucial role in carrying world trade, especially food supplies. National governments need to heed this call to upgrade infrastructure and plan for every eventuality.
Source: Alibra Shipping