THE United Nations trade body warned on Thursday that global trade is being hit hard by attacks in the Red Sea, the war in Ukraine, and low water levels in the Panama Canal.

Jan Hoffmann, a trade expert at the UN Conference on Trade and Development (UNCTAD), warned that shipping costs have already surged and energy and food costs are being affected, raising inflation risks.

Since attacks by Yemen's Houthi-led government on ships in the Red Sea began in November, he said, major players in the shipping industry have temporarily stopped using Egypt’s Suez Canal, a vital route for energy and cargo between Asia and Europe.

The Suez Canal handled 12-15 per cent of global trade in 2023, but UNCTAD estimates that the trade volume going through the waterway has dropped by 42 per cent over the last two months.

Since November, the Yemenis have launched at least 34 attacks on shipping through the waterways leading to the Suez Canal as they call for a halt to the brutal assault on Palestinians by Israel in Gaza. 

Mr Hoffmann said other major trade routes are also under strain.

The nearly two-year war since Russia’s February 24 2022 invasion of Ukraine and other geopolitical tensions have reshaped oil and grain trade routes including through the Black Sea, he said.

Mr Hoffmann said a severe drought has dropped water levels in the Panama Canal to their lowest point in decades, severely reducing the number and size of vessels that can ply it.

Total transits through the Panama Canal in December were 36 per cent lower than a year ago, and 62 per cent lower than two years ago, Mr Hoffmann said.

Mr Hoffman said: “Here you see the global impact of the crisis, as ships are seeking alternative routes, avoiding the Suez and the Panama canals.”