Climate Change Disrupts Major Shipping Routes: El Niño and the Growing Threat to Global Trade

Climate-driven extreme weather events are increasingly disrupting major shipping routes, with El Niño exacerbating the issue. El Niño, a climate pattern characterized by unusual warming of surface waters in the central and eastern tropical Pacific, occurs every two to seven years.

Its impacts peak around December, and with global temperatures having risen by 1.1 degrees Celsius compared to the late 19th century, 2024 might see humanity exceed the 1.5-degree Celsius climate threshold.

In drought-stricken Panama, low water levels have led to a reduction in the number of ships passing through the vital Panama Canal.

This has caused a backlog of vessels, as the canal is a key route that shortens the journey between the Atlantic and Pacific Oceans. The Panama Canal Authority has described the current drought as having “no historical precedence.”

The situation is further complicated by the onset of El Niño, which the U.N. weather agency recently declared. This event is expected to lead to higher global temperatures and more extreme weather.

Peter Sands, chief analyst at Xeneta, warns that the current conditions may be just the beginning, with the potential for more severe droughts in 2024. He notes that such disruptions highlight the fragility of the global “just-in-time” delivery model, as seen in the 2021 Suez Canal blockage by the Ever Given.

While shipping giant Maersk has managed to mitigate the impact of the Panama Canal delays, it acknowledges that climate-related disruptions are becoming more frequent and severe. The company now faces constraints due to reduced water levels, affecting how many containers can be loaded.

Other critical waterways, such as the Rhine River in Europe, are also struggling with low water levels, further complicating global shipping logistics.

According to Marsh, a global insurance broker, understanding the vulnerabilities of these maritime chokepoints is crucial as climate-driven weather events increase. Disruptions in key waterways like the Suez and Panama canals, the Strait of Malacca, the Strait of Hormuz, and the Bab-el-Mandeb can have far-reaching effects on global supply chains.