Red Sea Ship Attacks and Panama Canal Drought

Context:

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.

Relevance:

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