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Red Sea Ship Attacks and Panama Canal Drought


Recent attacks on ships in the Red Sea trade route and the ongoing drought problem at the Panama Canal have raised worries about global trade disruptions.


GS II: International Relations

Dimensions of the Article:

  1. Key Issues in the Red Sea and Panama Canal: Overview
  2. Significance of Maritime Transport in Global Trade
  3. Measures India Can Adopt to Reduce Vulnerability

Key Issues in the Red Sea and Panama Canal: Overview

Red Sea:
  • Chemical Tanker Attack:
    • Incident: Drone attack on chemical tanker MV Chem Pluto.
    • Location: Approximately 200 nautical miles off Gujarat’s coast.
    • Vessel Details: Liberia-flagged, Japanese-owned, and Netherlands-operated.
    • Journey: Commenced journey carrying crude from Al Jubail, Saudi Arabia.
    • Alleged Perpetrators: Houthi rebels based in Yemen, expressing protest against Israel’s actions in Gaza.
    • Conflict Context: Houthi rebels involved in a decade-long civil conflict with Yemen’s government
  • Impact on India:
    • Concerns for Importers and Exporters:
      • Indian oil importers and exporters face potential disruptions.
      • Key commodities like basmati and tea at risk.
    • Trade Route Significance:
      • Critical trade route disruptions may elevate Indian agricultural product prices.
      • Rerouting through the Cape of Good Hope may lead to a 10-20% increase.
Panama Canal:
  • Drought-Induced Shipping Reduction:
    • Issue: Due to drought conditions, shipping through the 51-mile stretch of the Panama Canal has decreased by over 50%.
  • Climate Pattern Impact:
    • Naturally occurring El Nino climate pattern, associated with warmer-than-usual water in the central and eastern tropical Pacific Ocean, contributes to Panama’s drought.
  • Impact on Trade Routes:
    • Water shortage compels vessels from Asia to the US to choose the Suez Canal, adding six extra days compared to the Panama Canal route.
  • Strategic Significance:
    • Bab-el-Mandeb Strait connects Asia to Europe via the Suez Canal in the Red Sea region.
    • The 100-year-old Panama Canal connects the Atlantic and Pacific Oceans.
    • Both routes rank among the world’s busiest.

Significance of Maritime Transport in Global Trade:

  • Dominance in Global Trade:
    • Maritime transport accounts for 80% of global trade by volume and over 70% by value.
    • This dominance surpasses other transportation modes, as reported by the United Nations Conference on Trade and Development.
  • Trade Value:
    • In 2019, the annual world shipping trade’s total value exceeded 14 trillion US Dollars.
  • Environmental Impact:
    • While shipping contributes to about 3% of global greenhouse gas emissions, it is more fuel-efficient and emits less per ton of cargo compared to modes like air freight.
  • Energy Resource Transport:
    • Critical for global energy needs, with the majority of energy resources (e.g., oil and natural gas) transported by sea.
    • Tankers play a crucial role, carrying resources from production to consumption regions.

Measures India Can Adopt to Reduce Vulnerability:

  • Collaborative Security Framework:
    • Propose a security framework involving key Red Sea stakeholders (Egypt, Saudi Arabia, UAE, Yemen).
    • Emphasize intelligence sharing, coordinated patrols, and joint exercises to enhance maritime security.
  • Surveillance Systems:
    • Install integrated radar and drone surveillance systems along India’s western coastline.
    • Enhance early threat detection and response capabilities to safeguard against potential maritime security threats.
  • Engagement with Panama Canal Authorities:
    • Collaborate with Panama Canal authorities.
    • Explore options for preferential passage or potential toll discounts for Indian vessels on specific routes to mitigate trade disruptions.

Source: Indian Express

February 2024