Middle East Shipping Routes at Risk and the Global Trade Shock

The world’s busiest sea lanes are under threat. Attacks, rerouted ships, and rising costs are quietly shaking global trade and pushing prices higher everywhere.

The world depends on a few narrow sea routes for most of its trade. When these lanes work smoothly, goods move fast and prices stay stable. When they don’t, the shock spreads from ports to factories to markets in every continent. In 2025, the tension around the Middle East’s major shipping chokepoints has become one of the most serious disruptions to global maritime trade in decades.

The Suez Canal and the Bab el-Mandeb Strait are more than just passages on a map. They are arteries for the global economy. In 2023 about 15 per cent of all international shipping went through the Suez Canal. That includes a massive share of the world’s containers, oil, natural gas, and manufactured goods. (United Nations)

But conflict spilled into the Red Sea region and changed that picture. Yemen’s Houthi militants, aligned with Iran, began attacking commercial vessels in late 2023. Their campaign was tied to wider Middle East tensions, and it quickly made the Red Sea and Bab el-Mandeb extremely dangerous for shipping. As a result, major ocean carriers began avoiding the route entirely. (Dryad Global)

Before the attacks, the Bab el-Mandeb Strait saw hundreds of large vessels each week. But data from early 2025 shows traffic dropped by nearly half. Bulk carriers, tankers, and containerships all saw steep reductions in transit. The total tonnage moving through the strait fell sharply too, lowering the amount of goods that could make this shortcut between Asia and Europe. (Dryad Global)

The first big consequence was a surge in shipping times and costs. When carriers rerouted around Africa’s Cape of Good Hope instead of through the Red Sea, journeys became 10 to 15 days longer on average. Longer voyages mean higher fuel costs, more crew wages, and tighter schedules. For companies scheduling just-in-time deliveries, delays quickly become expensive. (IMF)

This strain on global supply chains did not stay out at sea. Higher freight costs fed into prices for consumers on land. Industries that rely on imported parts, like automobiles and electronics, faced delays. Food and energy prices also saw pressure, because many agricultural exports and liquefied natural gas shipments depend on these routes. (IMF)

The economic pain was not uniform. Countries with big ports and diversified logistics could weather the storm better than smaller economies that depend on quick, efficient maritime trade. For Egypt, the financial impact was immediate. Revenue from the Suez Canal — a major source of foreign currency — dropped significantly, with authorities reporting a double-digit decline in annual toll income compared to previous years. (The National)

Shipping companies also reacted with caution. Some major global carriers like A.P. Moller-Maersk paused container voyages through the Bab el-Mandeb Strait when attacks reached a peak. Others began planning alternative networks, shifting cargo flows and reevaluating risk insurance. (S&P Global)

The effects on freight availability and cost have been visible in ports around the world. With longer transit times, containers accumulate at some hubs, causing congestion and delays for onward movement. Ports in South Africa, East Africa, and the Mediterranean saw increasing demand as alternative loading or transshipment points, reshaping regional trade lanes and local labor demands. (Afrodolphin)

At the same time, not all news has been bleak. By mid-2025 shipping traffic in the Red Sea began to show signs of recovery. As tensions eased somewhat, daily vessel transits increased compared to lows in 2024, though volumes remained well below pre-conflict levels. This partial recovery showed that even fragile stability matters to shipping lines making decisions on costly and dangerous routes. (D40 E-Paper)

In December 2025, several global carriers took symbolic steps back toward normalcy. A Danish container vessel completed a transit through the Red Sea and Bab el-Mandeb Strait for the first time in nearly two years, a cautious move that some in the industry see as a potential early sign of longer-term route reopening. Another major company navigated the Suez Canal in late December, signaling confidence building among carriers that security conditions may be stabilizing. (Reuters)

Yet these cautious movements do not mean the crisis has disappeared. Shipping firms are planning only gradual returns, dependent on security thresholds and continued reduction in militant attacks. For now, the balance between risk and economic efficiency remains fragile. (Reuters)

Behind all this are geopolitical and strategic struggles that go beyond maritime transport. Regional power plays between Iran, Saudi Arabia, and other Middle Eastern states intersect with global diplomatic tensions involving the United States, Europe, and Asian powers. Non-state actors like the Houthis leverage maritime disruption as a form of political pressure, showing how fragile global trade routes can be weaponized in broader conflicts. (Crisis Group)

The impact of these disruptions has also drawn warnings from international organizations. The United Nations Conference on Trade and Development, which tracks global shipping trends, highlighted that trade through key chokepoints like the Suez Canal dropped sharply in periods of heightened conflict, and that geopolitical tensions now compound other risks like climate change to make such routes harder to rely on. (UN Trade and Development (UNCTAD))

One important lesson emerging from this crisis is how concentrated maritime trade remains. Over 80 per cent of global goods still move by sea, and a tiny number of routes carry a disproportionate share of that volume. A disturbance in just one area — whether from conflict, piracy, or weather — can ripple outward, affecting supply chains and economies thousands of miles away. (UN Trade and Development (UNCTAD))

Another dimension is the insurance and financial cost. War risk premiums for ships traveling through contested waters have surged, in some cases reaching levels that make the traditional Suez route less economically attractive than safer but longer alternatives. Higher insurance costs ultimately feed into freight rates and, eventually, consumer prices. (Dryad Global)

Looking forward, stakeholders have a mix of strategies but no easy solutions. Shipping carriers want stable passage because shorter routes save time and money. Ports along alternative routes are investing in infrastructure to handle increased volumes. Countries like Egypt and Djibouti are trying to balance security cooperation with economic incentives to preserve their roles in global trade. Regional navies and international coalitions patrol contested waters, but their presence is costly and politically complex. (United Nations)

Some analysts say the crisis has forced the shipping industry to become more resilient and diversified. Companies are exploring new overland corridors, like rail links between Asia and Europe, and better forecasting tools to anticipate geopolitical risks. Others see potential in longer-term strategic shifts, such as deepening ties between African ports and Asian markets as part of broader trade corridor initiatives.

But deeper questions remain. If major global shipping routes can be disrupted for years by conflict in a localized region, what does that mean for future global trade security? The answer may lie in a combination of diplomacy, military cooperation, and logistical innovation, but there is no guarantee that any one approach will prevent the next shock.

For the millions of people whose jobs depend on exports and imports, who wait for goods and supplies, and whose economies rely on stable trade, the stakes are not abstract. Every day of uncertainty pushes prices up, slows deliveries, and forces companies to rethink how to move the world’s goods in an unstable era. The risk to Middle East shipping routes is no longer just a regional problem. It is a global economic dilemma with no easy exit.