The Achilles heel of global supply chains
The choke points connect major global markets. Europe and Asia are connected through the Suez Canal, while the Strait of Hormuz is the main route for the Persian Gulf exports. In 2021, the restrictions on the Suez Canal led to global shipping delays.
The tensions related to the Strait of Hormuz or Bab al-Mandeb have resulted in a halt to major shipping companies. In 2023, the Panama Canal disruption led to restricted movement of ships across the canal, resulting in astronomical shipping delays and significant economic losses.
Maritime choke points play an indispensable role in global trade. Disruptions of these choke points can trigger cascading failures in the supply chain. They can be referred to as the Achilles heel, the primary being:
The Strait of Hormuz is the world's most essential and critical energy corridor. 20% of oil and 30% of liquefied natural gas (LNG) are shipped through this narrow stretch of water. This narrow stretch of water lies between Iran to the north and the United Arab Emirates (UAE) and Oman to the south, linking the Persian Gulf to the Gulf of Oman and the Arabian Sea. A closure or disruption could lead to soaring oil prices and devastate those economies that depend on Gulf oil. It also has the potential to trigger immediate global consequences.
The Suez Canal connects the Mediterranean Sea to the Red Sea. It carries approximately 12% of global trade. In 2021, one ship blocked the canal, and the world had to pay a price of $9.6 billion daily for stalled shipments. Any disruptions and restrictions could paralyse global supply chains, leading to soaring inflationary pressures worldwide.
The Panama Canal connects the Atlantic Ocean and the Pacific Ocean. It carries 46% of the shipping across the US East Coast and Asia. The severe drought in 2023-2024 raised questions on the viability of this channel for sustainable international trade. In the early months of 2024, there was a 36% decline in canal traffic. Despite numerous challenges, the unavailability of an alternative shipping route renders this canal both strategically and critically important for international trade.
The Strait of Malacca spans three countries: Indonesia, Singapore, and Malaysia. This strait handles 80% of China's oil exports and 40% of Japan's maritime trade. Globally, the Strait of Malacca accounts for approximately 30% of the world's international trade. Any conflict or disruptions to this strait could paralyse or stop East-West trade.
These narrow straits of water or maritime choke points are the Achilles' Heel of international trade. Any pressure on these points due to conflict, climate change, war, or geopolitical escalations would send ripples across the global north and south, crippling the global supply chain network, and businesses and people would face outsized consequences.
These maritime choke points have gained significant importance in global security and economic stability. Companies must engage in resilience planning and adopt strategies to navigate the geographical inevitability by near-shoring critical supplies and goods, real-time risk monitoring, and financial hedging. Until some scalable alternatives emerge, these maritime chokepoints will continue to be the spine of international commerce.
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Forbes
7 days ago
- Forbes
Zero Trust, Microsegmentation And The Return To Fundamentals
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The Star
21-07-2025
- The Star
At Cezanne, Malaysian flavours meet Western techniques in inside an art gallery
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Address: Block C-G-01, Plaza Arkadia, 3 Jalan Intisari, Desa Parkcity, 52200 Kuala Lumpur Open Tuesday to Saturday: 6pm to 11pm
Euronews
19-07-2025
- Euronews
42 million EU workers can't afford holiday: Which countries are worst?
In 2023, 15% of employed people in the EU were unable to afford a one-week holiday away from home. While this percentage might not appear very high at first glance, it represents around 42 million workers. In each of the EU's "Big Four" economies (Germany, France, Spain and Italy), over 5 million workers were unable to afford a week-long holiday according to Eurostat data published by the European Trade Union Confederation (ETUC). 'Taking a break with family or friends is important for our physical and mental health, and it is a basic part of the European social contract,' said ETUC General Secretary Esther Lynch, criticising the situation. Holiday poverty among workers continues to rise Holiday poverty among workers is on the rise across the EU, marking the third consecutive annual increase. In 2022, 40.5 million employed people reported being unable to afford a one-week holiday away from home. 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'After working hard all year, it is the least working people should be able to expect to afford and should not be allowed to become a luxury for the few,' Lynch said. 'However, these figures show that Europe has a quality jobs emergency and that our social contract is continuing to crumble as the result of growing economic inequality.' Is holiday poverty linked to income? There is a moderately strong negative correlation between the share of workers who cannot afford a one-week holiday away from home and annual net earnings. This means that as net earnings increase, the proportion of workers unable to afford such a holiday tends to decrease. However, since the correlation is moderate, it also indicates that in some countries, this relationship is not strong or does not follow the overall trend as closely. For example, Ireland (€43,897) had one of the highest annual net earnings in the EU in 2023, yet holiday poverty remains comparatively high. 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The level of disposable income plays a key role, as it directly affects people's ability to spend on holidays—particularly when looking at figures for the general population. The ETUC calls on national governments to fully implement the Minimum Wage Directive and urges the European Commission to ensure that the Quality Job Package due this year includes legislation to rebalance the economy—making respect for collective bargaining a condition for access to public contracts.
