Chokepoints: Suez, Panama and Malacca

How a handful of narrow waterways carry a large share of world trade, and what happens to prices and supply chains when they are blocked.

Much of the world’s shipping passes through a few narrow passages called chokepoints. When one is disrupted, the effects ripple through supply chains and prices around the globe.

The major chokepoints

The Suez Canal in Egypt links the Mediterranean and Red Sea, creating the shortest sea route between Europe and Asia. Before recent disruptions, roughly 12 percent of global trade passed through it.
The Panama Canal links the Atlantic and Pacific oceans, saving ships a long voyage around South America.
The Strait of Malacca between Malaysia, Singapore and Indonesia is the main shipping route between the Indian Ocean and East Asia.
The Strait of Hormuz at the mouth of the Persian Gulf carries a large share of the world’s seaborne oil.

When chokepoints close

In March 2021, the giant container ship Ever Given ran aground in the Suez Canal and blocked it for six days. Hundreds of ships queued at each end. Lloyd’s List, a shipping publication, estimated that the blockage held up around 9 to 10 billion dollars of goods each day.

From late 2023, attacks on ships in the Red Sea by Houthi forces in Yemen led many shipping companies to avoid the Suez route entirely and sail around Africa’s Cape of Good Hope instead. This added thousands of kilometres and around 10 days or more to voyages between Asia and Europe, raising fuel costs, insurance premiums and freight rates.

Drought on the Panama Canal

The Panama Canal relies on fresh water from Gatun Lake to fill its locks. During a severe drought in 2023, water levels fell so low that authorities cut the number of ships allowed through each day. Queues formed, some ships paid millions of dollars in auctions to skip the line, and others took longer routes. Climate and weather can threaten chokepoints as much as conflict.

Building resilience

Because chokepoints concentrate risk, companies and governments consider alternatives: diversified routes, rail links across continents, extra inventory and new pipelines. But alternatives are usually more expensive, so chokepoints remain central to world trade.

Thinking a short blockage has little effect

A blockage of just a few days can create delays lasting weeks, as queued ships arrive at ports all at once, containers end up in the wrong places, and schedules take time to recover. Supply chains are tightly linked, so small disruptions spread widely.

Key takeaways

A few narrow waterways, such as Suez, Panama, Malacca and Hormuz, carry much of world trade.
The Ever Given blocked the Suez Canal for six days in 2021, holding up huge volumes of goods.
Red Sea attacks from late 2023 pushed many ships around Africa, raising costs and delays.
Drought at the Panama Canal in 2023 showed that weather also threatens chokepoints.