Over 80 per cent of the international trade is transported by sea, and what is more interesting is that a significant share of this passes through a handful of maritime choke points, making them of strategic importance. Maritime choke points are narrow straits or canals that connect a large portion of the global shipping to major oceans and seas. These choke points are strategically significant as they provide passage for oil, natural goods, and other commodities, thus having the power to disrupt international trade.
The choke points connect major global markets. Europe and Asia are connected through the Suez Canal, while the Strait of Hormuz is the main route for the Persian Gulf exports. In 2021, the restrictions on the Suez Canal led to global shipping delays.
The tensions related to the Strait of Hormuz or Bab al-Mandeb have resulted in a halt to major shipping companies. In 2023, the Panama Canal disruption led to restricted movement of ships across the canal, resulting in astronomical shipping delays and significant economic losses.
Maritime choke points play an indispensable role in global trade. Disruptions of these choke points can trigger cascading failures in the supply chain. They can be referred to as the Achilles heel, the primary being:
The Strait of Hormuz is the world’s most essential and critical energy corridor. 20% of oil and 30% of liquefied natural gas (LNG) are shipped through this narrow stretch of water. This narrow stretch of water lies between Iran to the north and the United Arab Emirates (UAE) and Oman to the south, linking the Persian Gulf to the Gulf of Oman and the Arabian Sea. A closure or disruption could lead to soaring oil prices and devastate those economies that depend on Gulf oil. It also has the potential to trigger immediate global consequences.
The Suez Canal connects the Mediterranean Sea to the Red Sea. It carries approximately 12% of global trade. In 2021, one ship blocked the canal, and the world had to pay a price of $9.6 billion daily for stalled shipments. Any disruptions and restrictions could paralyse global supply chains, leading to soaring inflationary pressures worldwide.
The Panama Canal connects the Atlantic Ocean and the Pacific Ocean. It carries 46% of the shipping across the US East Coast and Asia. The severe drought in 2023-2024 raised questions on the viability of this channel for sustainable international trade. In the early months of 2024, there was a 36% decline in canal traffic. Despite numerous challenges, the unavailability of an alternative shipping route renders this canal both strategically and critically important for international trade.
The Strait of Malacca spans three countries: Indonesia, Singapore, and Malaysia. This strait handles 80% of China’s oil exports and 40% of Japan’s maritime trade. Globally, the Strait of Malacca accounts for approximately 30% of the world's international trade. Any conflict or disruptions to this strait could paralyse or stop East-West trade.
These narrow straits of water or maritime choke points are the Achilles' Heel of international trade. Any pressure on these points due to conflict, climate change, war, or geopolitical escalations would send ripples across the global north and south, crippling the global supply chain network, and businesses and people would face outsized consequences.
These maritime choke points have gained significant importance in global security and economic stability. Companies must engage in resilience planning and adopt strategies to navigate the geographical inevitability by near-shoring critical supplies and goods, real-time risk monitoring, and financial hedging. Until some scalable alternatives emerge, these maritime chokepoints will continue to be the spine of international commerce.
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