Could the Gaza Ceasefire Reduce Global Shipping Emissions?

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Peace in Gaza is set reverberate through global supply chains | Credit: Pixabay
Supply chain experts believe peace in the Middle East will encourage companies to ship via the Red Sea again after a long period of circumnavigation

Ongoing tensions and conflicts in the Middle East have had a profound effect on global shipping.

As the gateway between Europe and Asia, the Suez Canal is one of the world's most essential waterways, acting as a conduit for around 30% of global container traffic.

However, the route marked decrease in traffic across the past year as a result of a string of attacks on cargo ships by the Houthi rebels of northwest Yemen.

The Suez Canal acts as a conduit for 30% of the world's container shipments

The details of the Red Sea shipping crisis

Since November 2023, the Houthis have carried out more than 100 attacks on ships, sinking two vessels, seizing another and killing at least four crew members.

Now, rather than passing through the Red Sea, many ships are choosing to sail around Africa's southernmost tip and emit an additional 35.7 million tons of CO2 in the process.

This data comes from INVERTO, the supply chain management division of Boston Consulting Group. INVERTO equates these additional emissions to the annual output of 7.8 million cars, which is more than triple the number of cars in London.

Between September 2023 and September 2024, the Suez Canal saw a reduction from 2,133 ships to just 999 ships, a startling but understandable drop off.

However, since the announcement of the ceasefire in Gaza, the Houthi rebels have released hostages from the Galaxy Leader, a cargo ship they had seized in November 2023.

On 20 January 2025, the group also released communications saying that all ships (other than Israeli ships, towards which the group intends to remain hostile) will be able to safely transit the Red Sea, as long as the ceasefire agreement continues to be honoured.

Whilst this is no guarantee that Red Sea tensions will dissipate entirely, some logistics companies may see fit to return to the route.

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Operational delays and cost implications

The safety concerns stemming from regional instability are causing significant disruptions in global supply chains, most notably affected in increased transit times and shipping costs.

For businesses that rely on the 'just-in-time' inventory model, this is particularly problematic.

These companies, which usually keep stock levels low to save on storage costs, are being forced to hoard more inventory to guard against unforeseen delays - an approach that locks up valuable capital in unsold goods and diminishes financial efficiency.

“The impact on the environment of Red Sea disruption should not be underestimated. Cargo ships are large emitters of CO2 and this is forcing them to travel thousands of extra miles to reach Europe,” explains Patrick Lepperhoff, Managing Director at INVERTO.​​​​​​​

“The ceasefire deal between Israel and Hamas – if it holds – may bring greater stability to the region and allow more shipping to return to the Red Sea through the Suez Canal."

This, in turn, could prevent millions of tons of carbon from being emitted, which is a huge boost for the sustainability of the shipping sector.

Patrick Lepperhoff, Managing Director at INVERTO

Long-term impacts on supply chains

Further challenges loom on the horizon, as increased shipping rates and possible tariffs threaten to exacerbate financial strains for businesses. These possible economic pressures highlight the need for a strategic approach to handle operational delays and cost management effectively.

“Extended lead times could pose two distinct challenges for businesses: delays and operational issues and an additional increase in costs due to increased shipping rates and tariffs if they are introduced,” Patrick adds.

The ongoing conflict in the Red Sea, if unresolved, will continue to urge businesses to adopt measures that not only manage costs but also reduce emissions elsewhere in their operations.

“Hopefully the ceasefire in the Middle East brings peace in the long term. That would bring with it the potential for shipping in the region to return to normal,” concludes Patrick.

This maritime turmoil underscores the broad and deep impacts of geopolitical instability on global supply chains.

It stresses the urgent need for systemic resilience and more sustainable practices to mitigate such disruptions in the future.


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