Much of global trade and economy is dependent on sea freight, and the shipping routes they use. When the Ever Given, one of the largest container ships in the world, blocked the Suez Canal in March 2021, it disrupted the global supply chain. LLoyd’s List forecasted the delayed goods will cost US$400 million each hour, and every day the canal remains blocked will affect an additional US$9 billion worth of trade. 

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The Ever Given was eventually dislodged after six days, which is a long time in the context of global trade. A rise in oil prices was attributed to the incident, and markets already suffering a shortage were further pushed to the brink of collapsing. 

The six-day blockage of the Suez Canal, where 12% of global trade goes through, and its impact on the global economy shows how critical shipping routes are for global trade. The Suez Canal is just one of the busiest shipping routes in the world. There are a handful of other major shipping routes that serves as the backbone of global trade.

The Suez Canal

As evident in the Ever Given incident in 2021, the Suez Canal plays a critical role in the global economy. Located north east of Egypt, it connects the Mediterranean Sea to the Red Sea, making it the shortest route from Europe to Asia. Its construction was completed in 1869 and it has been among the heaviest-used shipping routes ever since, seeing around 52 ships passing per day.

The canal is so narrow that it cannot accommodate two-way traffic, but a $10-billion expansion project is expected to double its capacity and triple its annual revenue by 2023. Today, the Suez Canal accounts for 12% of global trade and USD$1 trillion worth of goods per annum.

It’s been blocked a few times in history, and plenty of cargo ships always get stranded when it does. During the start of the Six Day War, fifteen ships got stuck in the canal and had to go around the Cape of Good Hope just to reach their destination. 

The English Channel

With an average of 500 ships passing through it every day, the English Channel is the busiest shipping route in the world. The channel links the North Sea and the Atlantic Ocean, wherein ships carry 22% of the United Kingdom’s imports from the European Union and 30% the other way around. It’s accountable for a quarter of all trade between the EU and UK, making it a critical route. 

The English Channel is also home to the Dover Strait, the world’s busiest shipping lane. Despite being the narrowest part of the English Channel, the strait is used by 400 ships every day – which includes not just cargo ships but also cruise ships and ferryboats.

The Strait of Malacca

Serving as the primary route into and out of Asia, the Strait of Malacca is one of the most important shipping routes in the world. The strait provides the shortest path between the Pacific and the Indian Ocean, linking Asian economies like China, India, Japan, Taiwan, Philippines, Singapore, Indonesia, Malaysia, and Thailand. It’s part of the Maritime Silk Road, which further speaks to its importance in global trade.

Above 83,000 seafaring vessels pass through the Strait of Malacca, which equates to 40% of sea traffic in the world. Furthermore, it’s also the shortest route between the Persian Gulf and Asia, making it a major shipping route for energy products. Around a quarter of all the oil transported by sea passes through the Strait of Malacca.

The Panama Canal

Cutting the transit time between the Pacific and the Atlantic ocean from 67 days to just 10 hours, the Panama Canal is a critical shipping route for global trade. The canal links Asia to the US East Coast, seeing about 14,000 ships and more than USD$270 billion worth of cargo passing through annually.

The USA is accountable for the largest volume of cargo passing through the canal with 69% of total shipping coming from the country. 

The Danish Straits  

Comprised by the channels Øresund, the Great Belt, and the Little Belt, the Danish Straits links the Baltic Sea to the North Sea. It serves as a critical shipping route for trade between Russia and Europe. In 2016, around 3.2 million barrels per day of crude oil and petroleum passed through the straits, making it an essential shipping route for Russia’s crude oil exports. A smaller volume of oil from the UK and Norway also passed through the shipping route to Scandinavia in the same year.

Conclusion

Man-made or natural, these shipping routes are necessary for global trade and economy to remain afloat. Ocean freight shipping remains and will remain the most efficient way of transporting goods between large distances for a long time, and this means these shipping routes will remain critical. The straits, canals, and channels will continue to be developed in order to support the growing global economy.