The Suez Canal Vulnerability: Why 12% of Global Trade is at the Mercy of Geopolitical Choke Points

Stand at Port Said on an ordinary Tuesday afternoon and you can watch them coming in — the enormous container ships queuing up from the Mediterranean, hulls sitting low with cargo, moving with the particular unhurried authority of something that weighs two hundred thousand tonnes and has nowhere urgent to be until it does. For something that transports so much global trade, the canal itself is remarkably narrow. The Red Sea and the Mediterranean were connected by a 193-kilometer waterway that was excavated through the Egyptian desert, cutting the distance between Asia and Europe by about 9,000 kilometers. The engineering is amazing. When you look closely, the geopolitical exposure is nearly frightening.

The Suez Canal handles about 12% of all international trade. 30% of container traffic worldwide. More than a trillion dollars in goods annually, averaging somewhere between $3 billion and $9 billion per day depending on what’s loaded in those hulls on any given passage. About 9 percent of the world’s seaborne oil flows through here — somewhere around 9.2 million barrels per day — and roughly 8 percent of global liquefied natural gas. These figures represent a single point of failure for the flow of goods on a scale that most consumers never consider until something goes wrong. Surprisingly frequently, something goes wrong.

The Houthi attacks on Red Sea shipping, which started in late 2023, caused the most recent protracted crisis. Iran-aligned Houthi militants in Yemen began targeting commercial vessels approaching the southern entrance to the canal, framing their attacks as solidarity with Palestinians amid the war in Gaza. Between November 2023 and well into 2024, they launched scores of missile and drone strikes, damaged multiple vessels, and ultimately sank at least one commercial ship. In response, the major shipping companies used the only weapon at their disposal: they circumnavigated Africa. Red Sea flights were halted by MSC, the biggest container carrier in the world. Tanker transits were halted by BP. Dry bulk cargo transits through the Suez had decreased by almost 80% year over year by June 2024. The amount of shipping that was rerouted through the Cape of Good Hope increased by 89%. According to UNCTAD data, transit counts through the canal itself decreased to roughly 57% of their previous peak by October 2024. This figure is hard to fully comprehend given the volume of commerce involved.

A normal trip from Asia to Europe is extended by about ten days due to the detour around southern Africa, which seems reasonable until you think about the implications on a large scale. Because the same ships were spending much more time in transit, effective global shipping capacity decreased by an estimated 20% at the height of the disruption. Spot rates for containers on Asia-Europe routes increased dramatically. As traffic patterns changed to accommodate a crisis that none of the infrastructure had been built to handle, port congestion emerged in locations not previously linked to bottlenecks, such as South Africa and Southeast Asia. According to the International Monetary Fund, persistent disruptions of this type drive up consumer prices due to increased import costs and shipping delays. Manufacturers and retailers in Europe, who were already coping with the complexity of the post-pandemic supply chain, were suddenly faced with delivery schedules that were weeks longer than expected and lacked clear resolution dates.

Although the historical record points to something more akin to a recurrent pattern at varying intensities, it is tempting to treat the Houthi episode as an exceptional event. During the 1956 Suez Crisis, Egypt nationalized the waterway and Britain, France, and Israel invaded, causing the canal to close for five months. It was closed for eight years, from 1967 to 1975, which resulted in a major structural reorganization of global shipping and sped up the development of supertankers built especially to cut costs on the longer African route. Over 450 ships were attacked in the Persian Gulf during the Iran-Iraq War in the 1980s, insurance rates in the region increased by 50%, and Suez Canal traffic decreased by 30%. An estimated $6.6 billion was lost to Somali piracy in a single year between 2005 and 2012. In 2021, a 400-meter container ship named Ever Given ran aground in a windstorm and blocked the entire canal for six days, during which time analysts estimated losses of $6 to $10 billion per week — roughly $400 million per hour — while 450 vessels queued at both ends waiting for the dredgers to finish.

The fact that there was no human malice involved in the Ever Given incident made it noteworthy. No state actor, no militant organization, and no geopolitical conflict. The entire connective tissue of trade between Asia and Europe ceased to exist when a ship got caught in a crosswind in a small channel. The lack of redundancy was made abundantly evident to the world. The alternative, the Cape of Good Hope, is about 9,000 kilometers longer and requires at least six more days at sea. It also comes with additional fuel and crew costs, insurance premiums in areas where piracy is common, and port congestion wherever the overflow builds up. A second canal does not exist.

The global system’s continued reliance on infrastructure presumptions that haven’t changed significantly since the canal opened in 1869 is difficult to ignore. The waterway was expanded in 2014 and 2015, nearly doubling daily vessel capacity from 49 to 97 ships, at a cost of $8.2 billion. In the fiscal year 2022–2023, Egypt’s toll revenue reached a record $9.4 billion. However, the canal’s typical performance is measured by its capacity and revenue. They don’t address the underlying exposure — that twelve percent of global trade, a trillion dollars annually, a significant share of the world’s oil and gas, runs through 193 kilometers of Egyptian desert with no backup option that doesn’t add cost, time, and carbon emissions in quantities that matter.

An additional level of complexity is introduced by the carbon dimension. A container ship diverted around the Cape of Good Hope releases an additional 5,400 tonnes of CO2 per voyage — equivalent to the annual output of over a thousand cars — which compounds across every vessel making the detour. Under typical operating conditions, the maritime industry already accounts for about 2.5% of global greenhouse gas emissions. While shipping companies and their clients absorb the cost difference in ways that typically flow downstream to consumers and, disproportionately, to the import-dependent economies least able to absorb them, routing disruptions do not reduce emissions; instead, they increase voyage distances.

Small island developing states and least developed nations bear a disproportionate share of the disruption costs, according to UNCTAD’s 2024 Review of Maritime Transport. These economies have the least alternative infrastructure and are most dependent on shipping for necessary imports. In theory, a 0.9 percent increase in consumer prices due to prolonged freight rate elevations may seem insignificant, but for a nation that imports 90 percent of its food via a now-disrupted route, it is anything but. The attacks were carried out by the Houthi militia in Yemen, which is highly dependent on food imports through the Suez Canal. The fact that the disruption they caused exacerbated their own nation’s food security crisis says something complex about the strategic reasoning behind maritime chokepoint warfare.

Observing this specific vulnerability endure decade after decade gives the impression that the global trade system has largely chosen to accept the risk rather than design around it. Until something stops it once more, 12% of global trade will pass through the Suez Canal. The question is not whether there will be another disruption. It’s the next form it takes and the length of time it takes for the passage to reopen at Port Said.