Expert Column Analysis of intl' Shipping Network Choke Points Crisis Factors and Impacts

1. Raising an Issue More than 80% of global trade volume is transported via ocean. In 2023, the ocean cargo volume amounted to approximately 12.3 billion tons, and the average travel distance per cargo was 5,047 miles (Nautical Mile).^[1] Economies of Scale and Economies of Distance have increased the density and frequency of shipping networks around the world.

In the international shipping network, there are unique choke points formed in natural and geographical conditions or historical context. Choke Points are located on key international transport routes to maximize transportation efficiency, but at the same time, they can be interpreted as “bottleneck” or “vital arteries” that are vulnerable to network disruptions or interruptions due to various factors. There isn’t a particular standard but Primary Chokepoints are classified as geopolitically more important and relatively more vulnerable locations among other chokepoints within international ocean network. In addition, Key Chokepoints are referred to as particularly high-sensitivity points among others.

Recently, 8 major chokepoints divided by UN Trade and Development are: 2 largest canals (Panama Canal and Suez Canal), 5 straits (Bab el-Mandeb Strait, Strait of Hormuz, Turkish Strait, Strait of Gibraltar, and Strait of Malacca) and Cape of Good Hope at the southernmost part of South Africa.^[1] Among them, the Panama Canal in Central America, the Suez Canal in the Middle East, the Bab-el-Mandeb Strait, the Strait of Hormuz, and the Strait of Malacca in Southeast Asia are key choke points.^[2]

We will look at the existing risk factors by focusing on 8 major choke points in the international shipping network and analyze key issues related to key choke points near the Panama Canal and Red Sea, where the crisis has escalated since the end of 2023 as well as their impact on the global economy. Furthermore, we will also examine a few points worth paying attention to after 2025. 2. Functions and Crisis Factors of International Shipping Network Chokepoints Panama Canal
The Panama Canal, which connects the Pacific Ocean and the Atlantic Ocean, was constructed by the US in 1914, and management rights were transferred to Panama in 1999 under the Panama Canal Treaty (so-called Torrijos-Carter Treaty) signed between the US and Panama in 1977. In 2016, the canal expansion project was completed to accommodate Neo-Panamax vessels. The Panama Canal, which accounts for 2.16% of the world's ocean trade cargo (more than 3% in 2023 and other years), is an essential facility for the US Pacific trade and naval vessel operations with approximately 13,000 vessels transporting mainly containers, automobiles, grains, and LPG on an annual basis.^[1]

A major recent crisis factor related to the Panama Canal has been the severe drought, causing significant disruption in the operation of the canal which was designed with a lock gate structure to overcome the difference in water levels between the oceans (Pacific and Atlantic) and the waterway. The canal's daily capacity is up to 50 vessels but decreased to 32 vessels in August 2023, and the number of vessels waiting to transit the canal increased drastically from 90 to around 200.^[3] In October 2023, Panama recorded the lowest rainfall (below the average of 41%) since 1950 impacted by El Nino.

In addition, another issue has drawn attention: the return of the Pamana Canal to the US, as advocated by President Trump. He argues that the Pamana Canal is charging excessive tolls on American vessels and “Chinese ports”* located at the entrance to the canal are posing risks to national security by collecting information on the movements of American merchant vessels, warships, and cargo.

* Balboa Port and Cristobal Port leased by Panama Ports Company, a subsidiary of Hutchison, until 2047.

It is unclear whether President Trump's claims will become reality. Yet, it is highly likely that checks on China, which is pursuing port projects in Central and South America through the One Belt One Road (OBOR) project, will materialize in one way or another. It is difficult to rule out the possibility that friction will emerge between the US and Panama or between the US and China.


Suez Canal
It is an artificial waterway completed in 1869 as the shortest route between Europe and Asia. It connects the Mediterranean and the Red Sea without natural water level differences, eliminating the need for lock gates and shortening the distance by up to 10,000 km compared to the Cape of Good Hope bypass route. Although it was within Egyptian territory, it was under British and French control for a long time after its completion; however, in 1956, Egyptian President Gamal Abdel Nassar nationalized the canal and it led to the Suez Crisis (Second Middle East War).

In 2015, the Egyptian government expanded the canal partly and opened a new waterway parallel to it in order to improve shipping efficiency. In 2023, more than 10% of the world's ocean cargo volume and 22% of container cargo volume were transported through the Suez Canal.^[1] Above all, the threat to the Suez Canal is the political and military tension prevalent in the Middle East. Historically, the Panama Canal has been closed several times due to the political and economic interests of countries in the Middle East. Even recently, military conflicts that have occurred in the Middle East and the Red Sea have physically restricted the passage of ships through the Suez Canal. In early 2024, immediately after the Houthi rebels' attack began, overall traffic volume decreased by 45%, and container traffic volume plummeted by more than 80%.

Along with this, a safe passage through the canal is a major threat. As a recent example, the 2021 stranding of the Ever Given in the canal revealed the canal's vulnerability to shipping accidents while both entrance and exit of the canal were blocked for six days, causing a global logistics crisis. During the canal's shutdown, cargo shipments from Taiwan to the Netherlands were delayed for about 9 days, and the damage to global trade was reported to be as high as $10 billion daily.^[4]


Bab el-Mandeb Strait
It is a narrow strait (about 26km) between the southwestern Arabian Peninsula (Yemen) and East Africa (Eritrea and Djibouti). It means “Gate of Tears” in Arabic. It was a major trade route connecting Asia, Africa, and Europe as part of the ancient maritime Silk Road. With the opening of the Suez Canal in 1869, it became an essential route for global trade connecting the Red Sea and the Mediterranean Sea, thereby becoming a target of exploitation not only by Western powers during the Imperialist era but also by the US and the Soviet Union during the Cold War.

It accounted for 8.7% of the global ocean cargo volume in 2023, and 20% of the world's automobiles, 20% of containers, 15% of petroleum products, and 13% of crude oil transported by sea passing through this strait.^[1] The Yemeni civil war, which began in 2015, along with Somali piracy cases occurring around the strait and the Gulf of Aden, is one of the key factors threatening the security of the strait.

In particular, in November 2023, Houthi rebels attacked commercial ships passing through the Red Sea and the Gulf of Aden with drones and missiles under the excuse of the war in the Gaza Strip between Hamas, the Palestinian armed and political wing, and Israel, paralyzing maritime routes including the Red Sea and the Suez Canal. They gained ground with the following activities: since November 2023, they launched 30 attacks on civilian commercial ships during two months; In July 2024, they exploded the Liberian-flagged oil tanker Chios Lion in the Red Sea. Accordingly, more than 70% of commercial ships rerouting via the Cape of Good Hope, an alternative route to the Suez Canal, imposed the global economic and environmental burden worldwide.


Strait of Hormuz
It connects the Persian Gulf and the Gulf of Oman, and the width of the strait is very narrow, so the route on which ships can actually sail is only about 3km in each direction. It has been used as a vital strategic location and a major trade route since ancient times. In the 16th century, Portugal occupied Hormuz Island and controlled the strait, and later European powers such as the UK and the Netherlands competed for control.

As petroleum was discovered as a new energy source in the 20th century with Persian Gulf oil-producing countries’ significant presence growing in the energy market in the 1970s, the importance of the strait as a center of global energy transportation grew. In 2023, 11.1% of the world's ocean cargo volume passed through this strait, and it is a particularly important route in global energy trade as it handles 31% of the world's ocean transportation crude oil, 31% of propane, 20% of petroleum products, and 19% of natural gas.^[1] The risk factor in the Strait of Hormuz is that the width of the strait is narrow, so there is a high possibility of large oil tanker accidents, which could possibly cause serious energy supply disruption around the world.

In addition, there is a possibility that diplomatic and military tensions will mount. Currently, the northern part of the strait is controlled by Iran, but the US and Western countries are engaging in military intervention in the name of guaranteeing freedom of navigation. Iran uses the Strait of Hormuz as a threat whenever tension with the US escalates. In May 2012, Iran threatened to block Hormuz as Western countries restricted oil exports to prevent Iran's nuclear development; in April 2024, it carried out retaliatory airstrikes against Israel and implied blocking the strait. However, it has only been used as a threat and has not yet been actually implemented. In addition, these waters are an area where pirate warlords are active, and tensions have increased in 2024, such as the Iranian Islamic Revolutionary Guard Corps' capture of MSC's Aries.


Turkish Strait
The Turkish Strait is a maritime passage connecting the Black Sea and the Aegean Sea, comprised of the Bosphorus Strait and the Dardanelles Strait within the Turkic territory, and has been considered a strategic point from ancient times to modern times. In 2023, 3.1% of the world's maritime cargo volume was transported through Turkish Strait.

Turkiye acquired sovereignty and military control over Turkish Straits through the Montreux Convention in 1936, which guaranteed the free passage of civilian ships in peacetime and prohibited foreign warships from passing through the straits in wartime. According to the convention, warships from non-coastal states in the Black Sea cannot remain in the Black Sea for more than three weeks after passing through the Bosphorus Strait and their gross tonnage should not exceed 45,000 tons. In this regard, in March 2022, Turkiye implemented the terms of the agreement requested by Ukraine to block Russian warships from entering the Black Sea.

In addition to the military aspect, the Turkish Strait has recently been suffering from environmental problems. In 2021, the Marmara Sea, which links the Black Sea and the Aegean Sea, has seen the largest outbreak of sea snot on record. In the Marmara region, 30% of Turkiye’s population and 50% of industrial facilities are concentrated, and domestic sewage and industrial wastewater discharged here is named as the cause.

In 2021, the Turkish government selected five locations in Marmara Sea and artificially injected oxygen at a depth of 30 meters. These environmental problems are likely to lead to increased passage costs or reduced physical accessibility for merchant ships via the Turkish Strait in the future. Meanwhile, the government is pursuing the Istanbul Canal project, an alternative waterway to the Bosphorus, in the name of strengthening the safety of the strait starting in June 2021, sparking a lot of controversy related to the environment and security not only in neighboring countries but also within the country.^[5]


Strait of Gibraltar
It is a strait between the southwestern tip of Europe and the northwestern tip of Africa and is located on the way from the Mediterranean Sea to the Atlantic Ocean. It has been a strategic location for trade and military since ancient times, and in modern times, it has become an important trade route through the Age of Exploration. In particular, its value increased further after the Suez Canal was built. The name of the strait derived from the ancient place name “Pillars of Hercules”, and it is an important passage for the transportation of energy resources such as crude oil and LNG heading to Europe.

One of the threats to this strait is the longstanding territorial dispute between Spain and the UK over 300 years. The UK occupied Gibraltar during the War of Spanish Succession in the 18th century, and after the war, Gibraltar was returned to British territory according to the Treaty of Utrecht (Vrede van Utrecht). Although it is a British dependency, it enjoys a high degree of autonomy. Although Spain has recently claimed sovereignty over the area, the residents chose British territory over Spanish territory. Another issue is African refugees escaping to Europe through the East Strait. In July 2018, the Spanish Coast Guard rescued 1,400 refugees over three days, and this life-saving activity has the potential to act as an unexpected variable in the strait passage conditions.


Cape of Good Hope
The Cape of Good Hope, the southernmost point of Africa, is part of the most essential maritime network linking Asia and Europe since the Age of Discovery. Recently, due to the Red Sea crisis, it has seen a significant increase in traffic as an alternative route to the Suez Canal. In 2023, before the outbreak of the Red Sea crisis, 8% of the global maritime trade was transported via the Cape of Good Hope. However, it faces risks of political instability of surrounding countries, piracy, etc. In addition, it was called the “Cape of Storms” during the Age of Discovery as the weather around this area is very harsh, and, by its nature, it’s not an advantageous condition for vessels to ply.


Strait of Malacca
The strait is located between the Malay Peninsula and Sumatra, connecting the Indian Ocean and the South China Sea. It has long been a gate for East-West trade since the ancient time. Often it is pronounced in a local language, “Melaka”. In 2023, 23.7% of the international maritime trade cargo passed the strait, composing 45% of crude oil, 42% of propane, 25% of automobiles, and 23% of bulk cargo.

East Asia countries, including China, depend on the Malacca Strait for 90% of crude oil imports. South Korea also transports 90% of oil and 30% of imports and exports through the strait. The strait is 930km in length but the narrowest part is only 2.8km in width, triggering serious bottleneck. The biggest vessel that can pass through the strait is Malaccamax, which restrains the size of tankers from getting larger. As the strait is narrow and congested, risks for collision and accidents are high. Additionally, it is notorious for modern piracy and frequently becomes a stage for vessel hijackings, abductions, robberies, etc. This ocean route showcases geopolitical conflicts between superpowers — the U.S., China, Japan, and others —, and military tension arising from the OBOR of China and maritime sovereignty disputes between the U.S. and South East Asia countries.

[Table 1] summarizes the risk factors and levels of severity of eight Choke Points on the global maritime network based on previous experiences and the current situation. However, items that are hard to predict at the current status are marked as “Cautious”.

3. Analyzing the Impact of the Panama Canal and the Red Sea Crisis UN Trade and Development (UNCTAD) utilized its simulation model to quantitatively analyze the impact of drought in the Panama Canal and the Red Sea crisis on the global freight rates, consumer prices, and real GDP. First of all, the CCFI (China Containerized Freight Index) soared over 160% in June 2024, compared to October 2023, with an analysis that the Panama Canal and the crisis in the Red Sea influenced it around 10% and 145%, respectively.

In January 2024, BDI went up by more than 80% compared to October 2023 and then declined afterward. The escalated BDI is partly due to operational anomalies in the Panama Canal (around 40%) and the disruption in the Red Sea (about 20%), which demonstrated how the Panama Canal is crucial to the transport of dry cargo.

Crises of Choke Points have increased consumer prices across the world by 0.6%. In particular, consumer prices of LDCs (Least Developed Country) were relatively high at 0.8%, and SIDS (Small Island Developing States) that lack inland transportation modes saw a 0.9% increase, mainly led by a surge in food prices (LDCs, 0.34%). This can be interpreted as these countries are highly reliant on ocean trade and vulnerable to global food security. On top of that, the crises of Choke Points resulted in reducing the world’s real GDP by 0.06%. As with consumer prices, these crises relatively affected LDCs and SIDS more by -0.07% and -0.11%, respectively.

As such, disruptions in Choke Points on the maritime network have an unnegligible impact not only on the ocean transport market but also on the world economy. Additionally, the increase in shipping distance and speed accompanies side effects by raising environmental concerns and eroding value of time. For instance, container ships rerouting via the Cape of Good Hope have to sail longer by 6,000 to 10,000km and faster by speeding up from 16 to 20 knots, emitting a three times larger amount of GHG. [Table 3] shows that, for the past few years, the average maritime travel distance has skyrocketed in the wake of issues, such as the Russia-Ukraine war, the Panama Canal disruption, the Red Sea attacks, etc.

On the other hand, separate from the result of the simulation, what is noteworthy is that from late 2023, urgent situations in the Panama and Red Sea were not linked to supply chain disruptions. As you can see in the [Table 4], Covid-19 in 2020 brought about the surge of GSCPI (Global Supply Chain Pressure Index) aligning with the drastic increase in freight since 2021. In contrast, after the contingencies of Choke Points at the end of 2023, the GSCPI barely surpassed 0 but showed a stable trend in 2025. It indicates that although the crisis put upward pressure on freights, inventory costs, and overall expenses of supply chains, the world economy has flexibly responded to traditional crises by utilizing diversion, alternative routes, diversification of supply chains, changes in trade patterns, etc.

* GSCPI is an index developed by the Federal Reserve Bank of New York of the U.S. to assess potential obstacles impacting the world’s supply chains based on data like transportation costs, ISM Index, transit time, inventory, etc. Positive numbers refer that the supply chain pressures are higher than the average.

4. Future Directions and issues As what has been demonstrated above, crises of Choke Points on the global maritime network have historically influenced global politics and the economy. Therefore, the article will cover how situations will unfold and what could be a new risk in the coming years. To begin with, tension in the Red Sea appears to be eased but cannot be seen as totally optimistic. For the past few years, the leadership of Hezbollah has collapsed during the war with Israel and recently, attacks from the Houthi are losing ground with the end of the civil war in Syria and the ceasefire in the Gaza region. After the war had terminated, the HOOC (Humanitarian Operations Coordination Center) of the Houthi side announced that they would restrict their attacks on vessels of The U.S. or the U.K. except for the ones related to Israel. However, big challenges lie ahead of resolving crises in the Red Sea: It would be hard to predict how much time would be needed to mitigate military tension as the ceasefire was stated not long ago; and President Trump provided an idea in February that the U.S. will take over the Gaza area and migrate residents by force, provoking a strong backlash from Arabic countries.

Moreover, he signed an administrative order to put the largest pressure on Iran to prevent it from developing nuclear weapons. If tension escalates in the Strait of Hormuz with his actions, it could impact the overall Middle East.

On the other hand, from the ocean carriers’ point of view, they can get some advantages by diverting via the Cape of Good Hope to maintain high rates and resolve space supply issues. Thus, it could take some time to return to the Suez Canal even if the canal operates normally. However it would not remain for long as diversion around the Cape of Good Hope would be disadvantageous for carriers who have to abide by strict GHG emission regulations offered by IMO. In the mid-to-long term, the North Pole route of Asia-Europe shipping could be a competitive alternative for the Suez Canal. Also, Trump withdrew from the Paris Agreement again on the first day of his presidency, raising the possibility of expanding the development and export of U.S. fossil fuels. It could lead to a decrease in the dependency of European countries on energy from the Middle East, potentially resulting in a reduction of the impact of the Red Sea and the Suez Canal on global supply chains.

Also, the Panama Canal might face political and diplomatic tensions other than climate change. President Trump publicly announced that he would restore the Panama Canal and didn’t deny the military involvement. As the Panama Canal Treaty was signed on the condition that the canal remain neutral permanently, the U.S. could impose military pressure on China if the canal is considered to be controlled by China. 72.2% of cargo passing through the canal in 2023 was from the U.S., so the actual military actions from the U.S. seem to be limited since it could damage its economy. Nevertheless, it is forecasted that the U.S. would put pressure on the Panama Canal to strengthen its influence in many ways, such as requesting to cut down on fees.

Even though the tension intensifies in the Panama Canal, it is less likely to push supply chains into the corner because of well-structured alternative routes (Land Bridge). Also, the ACP (Autoridad del Canal de Panamá) is known to plan a Land Bridge project connecting the Pacific and Atlantic.

Plus, the Strait of Malacca is a key Choke Point of the East Asian economy including South Korea, as it is a major route for transporting energy from the Middle East. It could be on the edge of unexpected situations anytime amid hegemonic competition between the U.S. and China. Asian regions, including the Strait of Malacca, have complicated historical relationships, so if military conflicts occur between these countries, the impact on the Korean economy and security could be uncontrollable. This article hasn’t mentioned this, but, especially, disputes over the maritime boundary are escalating in the South China Sea between China and neighboring countries. The Taiwan Strait is possibly the Choke Point at the highest risk, so it requires our keen attention as the “Cross-Strait War” could be realized between China and Taiwan.

Considering the huge transformation of the world economy and politics we are witnessing, it is high time for South Korea — which is highly sensitive to geoeconomics and geopolitics — to come up with effective measures to respond to future crises at Choke Points by diversifying or restructuring global supply chains for industries, proactively searching, developing and operating alternative routes and strategic points, etc. # Reference [1] UNCTAD(2024) Review of Maritime Transport 2024
[2] BCG(2024) These Four Chokepoints Are Threatening Global Trade
[3] 서울경제(2023.8.20) '최악가뭄' 파나마 운하···美·中운임 50% 급등
[4] 세계일보(2024.1.20) 전쟁·기후위기에 위험지역 된 해협·운하...'물류 경색'비상
[5] KIEF(2021) [이슈트렌드] 터키, 이스탄불 운하 건설 시작...환경 문제 대두
[6] Chatham House(2023) Chokepoints and Vulnerabilities in Global Food Trade
[7] Gunathilake, C.(2021) Maritime Choke Points Impacts on Global Economy If Disrubed, ResearchGate

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