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Home » UN Report: Future-Proofing Supply Chains a 'Strategic Necessity'

UN Report: Future-Proofing Supply Chains a 'Strategic Necessity'

A blue container ship with "CMA CGM" written on the side in white lettering

Photo: iStock / Bjoern Wylezich

October 23, 2024
SupplyChainBrain

Vulnerabilities at crucial maritime chokepoints have slowed the growth of container trade worldwide, according to a report from the United Nations Conference on Trade and Development Conference (UNCTAD). 

The UNCTAD's report released on October 22 found that container trade measured in tons of cargo grew by just 0.3% in 2023, after increasing by 1.2% in the previous year. That was due in large part to disruptions at the Panama Canal and in the Red Sea. And as Houthi rebels have continued to choke off traffic at the Suez Canal, ocean carriers have been forced to reroute shipments thousands of miles around Africa's Cape of Good Hope, adding significant costs tied to the EU's carbon emissions trading system. As an example, a typical large container ship carrying 20,000-24,000 twenty-foot equivalent units (TEUs) on the Far East-Europe route incurs an extra $400,000 in emissions costs per voyage when diverting around Africa from the Suez Canal. 

The UNCTAD also estimates that global trade measured in tons of cargo grew by 2.4% in 2023, while projecting another 2% of growth in 2024, driven primarily by demand for commodities such as iron ore, coal and grain. That said, future growth will largely be dependent on how the maritime industry adapts to ongoing disruptions, particularly as the war in Ukraine drags on and geopolitical tensions in the Middle East persist. 

“Building sustainable and resilient maritime transport and future-proofing global supply chains is not just an option — it’s a strategic necessity," UNCTAD secretary-general Rebeca Grynspan said. 

To accomplish that, the UNCTAD recommends accelerating investments in artificial intelligence to streamline operations at ports, improving early detection and monitoring systems at vulnerable shipping chokepoints, and diversifying shipping routes to decrease the maritime industry's reliance on corridors such as the Suez and Panama canals. It also calls for continued investments in alternative fuels to cut carbon emissions, and strengthened regulations to incentivize carriers to adopt greener technologies and renew aging fleets. 

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