The World’s Costliest Maritime Chokepoints – and Who Pays the Price?

➖ What’s Going On?
The Suez Canal remains a key maritime route, carrying about 12% of global trade. In 2024 and early 2025, security threats in the Red Sea, particularly attacks on commercial vessels near the Bab el-Mandeb Strait, have led some shipping companies to reroute around the Cape of Good Hope. This has resulted in longer transit times, increased fuel costs, and supply chain disruptions. The Suez Canal itself remains open, but geopolitical tensions have reduced traffic at times.

➖ How Did We Get Here?
Security concerns in the Red Sea escalated in late 2023 due to increased attacks on vessels by militant groups. The canal has faced previous disruptions, such as the Ever Given blockage in 2021, which highlighted vulnerabilities in global trade routes. While infrastructure improvements have been made, geopolitical risks continue to affect operations.

➖ How Much Does It Cost, and Who is Paying?
Shipping companies using alternative routes face higher costs due to longer voyages and increased fuel consumption. Some freight rates have surged, impacting exporters and importers worldwide. Egypt has also reported fluctuations in revenue as some traffic is diverted to longer routes.

➖ Who Benefits from the Disruption?
Shipping companies operating outside the Suez Canal, particularly those running larger vessels that do not rely on the route, have gained an advantage. Overland transport providers and alternative shipping routes have also seen increased demand.

➖ What Are the Alternatives?
Some vessels have rerouted through the Cape of Good Hope, adding significant time and costs. Overland transport via rail between Europe and Asia has also seen growth as companies seek to diversify their logistics strategies.

➖ What’s the Outlook?
The Suez Canal remains essential for global trade, and Egypt continues to invest in security and capacity expansions. However, ongoing instability in the Red Sea region means that shipping companies are increasingly factoring in geopolitical risks when planning routes.

➖ What’s Going On?
The Panama Canal has faced two major challenges in 2024-2025: ongoing drought conditions that have restricted shipping capacity and rising geopolitical tensions over canal operations. Low water levels in Gatún Lake have forced authorities to limit vessel transits, leading to congestion and higher shipping costs. At the same time, growing debates over foreign influence in the canal, particularly concerns about Chinese shipping interests and U.S.-Panama relations, have added uncertainty to its long-term management.

➖ How Did We Get Here?
The canal's reliance on freshwater has always made it vulnerable to droughts, but recent climate shifts have worsened water shortages. Meanwhile, Panama took full control of the canal in 1999 after nearly a century of U.S. administration. Since then, tensions have emerged over foreign investments in canal infrastructure, with the U.S. raising concerns about Chinese companies increasing their influence in Panama’s ports and shipping logistics.

➖ How Much Does It Cost, and Who is Paying?
Shipping companies are facing higher costs due to congestion, delays, and rerouting. The Panama Canal Authority has lost revenue from reduced transits, and global supply chains have been impacted, particularly for container ships and energy exports. Political uncertainty over potential changes in Panama's trade policies has also led to cautious investments in the region.

➖ Who Benefits from the Disruption?
Shipping firms that already operate larger vessels, which bypass the canal, have gained an advantage. Alternative transport routes, such as overland freight through the U.S. and Mexico, have seen increased demand. In the geopolitical space, China has continued strengthening trade ties with Panama, increasing its stake in regional logistics, while the U.S. has sought to maintain its influence in the region.

➖ What Are the Alternatives?
Some companies have shifted routes to the Suez Canal or taken the longer Cape of Good Hope passage. Land-based alternatives, including U.S. and Mexican rail systems, have also been used to connect cargo from the Pacific to the Atlantic. However, no alternative provides the same efficiency as the canal for many shipping routes.

➖ What’s the Outlook?
The drought-related issues will continue unless long-term water conservation solutions are implemented. Politically, Panama will need to balance relationships with both the U.S. and China as foreign investments shape the canal’s future. Ongoing tensions may lead to new regulations or trade policies that impact global shipping operations.

➖ What’s Going On?
The Strait of Hormuz remains one of the most strategically significant maritime chokepoints, responsible for the transit of nearly 20% of global oil supplies. In 2024-2025, tensions have escalated due to increased naval activity by Iran and threats against commercial vessels. Recent seizures of oil tankers and military exercises in the region have raised concerns about potential supply disruptions. While traffic continues to flow, security risks remain elevated.

➖ How Did We Get Here?
The region has long been a flashpoint for geopolitical tensions. U.S. sanctions on Iranian oil exports, regional conflicts involving Iran-backed groups, and periodic naval clashes have contributed to instability. In the past year, rising hostilities between Western nations and Iran have intensified the threat of disruptions to shipping in the strait.

➖ How Much Does It Cost, and Who is Paying?
Oil prices have remained volatile due to fears of restricted tanker movement. Insurance premiums for vessels operating in the Strait of Hormuz have increased, adding costs for oil exporters and importers. Energy-dependent nations, particularly in Asia and Europe, have faced fluctuating fuel costs, with consumers ultimately bearing the financial impact.

➖ Who Benefits from the Disruption?
Energy producers outside the Middle East, such as the U.S. and Canada, benefit from any price surges linked to tensions in the region. Alternative shipping companies offering security-escorted transit services have also seen increased demand.

➖ What Are the Alternatives?
Some oil exporters have increased reliance on pipelines through Saudi Arabia and the UAE to bypass the strait. However, these routes have limited capacity, meaning the Strait of Hormuz remains irreplaceable for global energy transit.

➖ What’s the Outlook?
While military patrols continue to secure the route, tensions between Iran and Western nations remain high. Any escalation in hostilities could lead to temporary shutdowns or restrictions, keeping global markets on edge. Long-term, diversification of energy sources and alternative pipeline routes may reduce reliance on the strait, but for now, it remains a critical chokepoint.

➖ What’s Going On?
The Strait of Hormuz remains one of the most strategically significant maritime chokepoints, responsible for the transit of nearly 20% of global oil supplies. In 2024-2025, tensions have escalated due to increased naval activity by Iran and threats against commercial vessels. Recent seizures of oil tankers and military exercises in the region have raised concerns about potential supply disruptions. While traffic continues to flow, security risks remain elevated.

➖ How Did We Get Here?
The region has long been a flashpoint for geopolitical tensions. U.S. sanctions on Iranian oil exports, regional conflicts involving Iran-backed groups, and periodic naval clashes have contributed to instability. In the past year, rising hostilities between Western nations and Iran have intensified the threat of disruptions to shipping in the strait.

➖ How Much Does It Cost, and Who is Paying?
Oil prices have remained volatile due to fears of restricted tanker movement. Insurance premiums for vessels operating in the Strait of Hormuz have increased, adding costs for oil exporters and importers. Energy-dependent nations, particularly in Asia and Europe, have faced fluctuating fuel costs, with consumers ultimately bearing the financial impact.

➖ Who Benefits from the Disruption?
Energy producers outside the Middle East, such as the U.S. and Canada, benefit from any price surges linked to tensions in the region. Alternative shipping companies offering security-escorted transit services have also seen increased demand.

➖ What Are the Alternatives?
Some oil exporters have increased reliance on pipelines through Saudi Arabia and the UAE to bypass the strait. However, these routes have limited capacity, meaning the Strait of Hormuz remains irreplaceable for global energy transit.

➖ What’s the Outlook?
While military patrols continue to secure the route, tensions between Iran and Western nations remain high. Any escalation in hostilities could lead to temporary shutdowns or restrictions, keeping global markets on edge. Long-term, diversification of energy sources and alternative pipeline routes may reduce reliance on the strait, but for now, it remains a critical chokepoint.

➖ What’s Going On?
The Bab el-Mandeb Strait has become one of the most dangerous maritime zones in 2024-2025 due to ongoing Houthi attacks on commercial vessels in the Red Sea. These militant groups, operating from Yemen, have launched drone and missile strikes targeting cargo ships, particularly those associated with Western nations. This has led to a significant increase in security costs, insurance premiums, and vessel rerouting.

➖ How Did We Get Here?
The conflict in Yemen has been ongoing for years, with Houthi rebels engaging in hostilities against Saudi and Western-backed forces. Their recent attacks on shipping are aimed at disrupting trade and pressuring foreign governments. The situation escalated after increased military interventions and retaliatory strikes in late 2023.

➖ How Much Does It Cost, and Who is Paying?
Shipping companies are paying higher security costs, and insurance premiums for vessels passing through the Red Sea have skyrocketed. Many companies have opted to reroute around Africa, adding 10-14 days to voyages and increasing fuel costs. Consumers may experience higher prices for goods due to increased shipping expenses.

➖ Who Benefits from the Disruption?
Shipping companies that specialize in alternative routes, such as those servicing the Cape of Good Hope, have seen increased business. Military contractors providing security services for vessels in the region have also benefited.

➖ What Are the Alternatives?
Many companies have shifted away from the Red Sea route entirely, opting for the Cape of Good Hope despite the longer journey. Some European and Middle Eastern overland trade corridors have also seen increased use.

➖ What’s the Outlook?
Without a resolution to the conflict in Yemen, risks will likely remain high. International naval coalitions are working to secure trade routes, but continued militant activity could make the Red Sea a prolonged high-risk zone. Shipping companies will need to factor in security costs and potential delays when planning their routes.

➖ What’s Going On?
The Strait of Malacca, one of the busiest maritime passages in the world, has been facing increased congestion in 2024-2025 due to rising trade volumes and logistical bottlenecks. With global shipping recovering from past supply chain disruptions, vessel traffic through this critical route has surged, leading to longer transit times. Security concerns, including the risk of piracy and territorial disputes in the South China Sea, have also added to operational challenges.

➖ How Did We Get Here?
As the shortest route between the Indian and Pacific Oceans, the Strait of Malacca has always been a high-traffic chokepoint. The continued growth of Asian economies and increased energy shipments have pushed the strait to near capacity. Seasonal weather disruptions and increased naval activity have further strained navigation.

➖ How Much Does It Cost, and Who is Paying?
Congestion has led to delays, causing higher fuel consumption for ships forced to idle while waiting for clearance. Insurance costs have also risen due to concerns over piracy and geopolitical instability in the surrounding waters. Importers and exporters across Asia, particularly in China, Japan, and South Korea, are feeling the effects of higher shipping costs.

➖ Who Benefits from the Disruption?
Ports in the region, such as those in Singapore and Malaysia, have benefited from increased transshipment activity as vessels seek to manage delays. Shipping companies that own larger vessels capable of carrying higher volumes per trip have also gained a competitive edge.

➖ What Are the Alternatives?
Some shippers have considered using alternative routes such as the Sunda Strait or Lombok Strait, but these are less efficient for large cargo volumes. Overland transport through rail corridors in China and Southeast Asia has seen some growth, but capacity remains limited.

➖ What’s the Outlook?
With demand for trade through the strait continuing to rise, congestion issues are unlikely to ease without significant infrastructure upgrades or alternative corridors. Ongoing efforts to improve traffic management and security in the strait may help, but long-term solutions will require regional cooperation.

➖ What’s Going On?
The Black Sea remains one of the most unstable maritime regions due to the ongoing Russia-Ukraine war. In 2024-2025, naval blockades, missile strikes on ports, and restrictions on grain and oil exports continue to disrupt global trade. Despite international efforts to maintain safe corridors, shipping through the region remains at high risk, with many vessels opting for alternative routes.

➖ How Did We Get Here?
The conflict between Russia and Ukraine escalated in 2022, leading to heavy restrictions on Black Sea trade. The collapse of previous grain export deals and continued attacks on Ukrainian ports have made maritime activity dangerous. Sanctions on Russian shipping have further complicated logistics in the region.

➖ How Much Does It Cost, and Who is Paying?
Ukraine and Russia, both major grain exporters, have seen their agricultural trade severely impacted. Global food prices have fluctuated due to instability in shipments. Energy exports from the region, including Russian oil and gas, have also been affected, with Europe and other buyers paying higher costs for alternative supplies.

➖ Who Benefits from the Disruption?
Countries with alternative grain supplies, such as the U.S., Brazil, and Australia, have seen increased demand for exports. Energy suppliers outside Russia, including Middle Eastern and U.S. firms, have benefited from shifting trade flows.

➖ What Are the Alternatives?
Some Ukrainian exports have shifted to rail and road transport through Poland and Romania. However, these land-based routes lack the capacity of Black Sea ports. Russian oil and gas exports have increasingly flowed toward China and India instead of Europe.

➖ What’s the Outlook?
As long as the war continues, security risks in the Black Sea will persist. Any future ceasefire or peace agreement could stabilize trade, but ongoing tensions make long-term predictions uncertain. Global markets will continue adapting to new trade routes and suppliers.

➖ What’s Going On?
The Turkish Straits, which include the Bosporus and Dardanelles, have seen increasing congestion and geopolitical tensions in 2024-2025. These straits serve as a critical link between the Black Sea and the Mediterranean, impacting grain exports, oil shipments, and military naval movements. Ongoing diplomatic tensions between Turkey, Russia, and NATO have led to tighter regulations on vessel movements, while seasonal congestion has caused shipping delays.

➖ How Did We Get Here?
The Russia-Ukraine conflict has placed renewed strategic importance on the Turkish Straits, as NATO and Russia continue to monitor naval activity in the Black Sea. Turkey, which controls the straits under the Montreux Convention, has imposed strict regulations on warships and commercial vessels linked to sanctioned entities. At the same time, increased global shipping demand has made congestion a recurring issue, especially during periods of high traffic.

➖ How Much Does It Cost, and Who is Paying?
Delays in the straits have increased costs for shipping companies due to longer wait times and congestion fees. Oil tankers and grain shipments have been particularly affected, leading to price fluctuations in global markets. Additional security measures and inspections have also raised operational expenses for vessels passing through the region.

➖ Who Benefits from the Disruption?
Alternative trade routes, including pipeline systems in the Caucasus and Eastern Europe, have seen increased use. Countries exporting oil and grain outside the Black Sea region have also benefited from supply chain shifts. Ports in Southern Europe, particularly Greece and Italy, have gained additional transshipment business.

➖ What Are the Alternatives?
Some Black Sea cargo has been rerouted through overland rail and trucking corridors in Eastern Europe. Pipeline networks carrying Russian oil to alternative ports have also been expanded. However, the Turkish Straits remain irreplaceable for many shipping routes, particularly for bulk commodities.

➖ What’s the Outlook?
With geopolitical tensions remaining high, regulatory changes and security measures are likely to continue. Seasonal congestion will also remain a challenge, particularly during peak shipping periods. Turkey’s strategic position means that the global shipping industry will need to adapt to evolving transit policies and potential diplomatic shifts.

➖ What’s Going On?
The Cape of Good Hope has become an increasingly used shipping route in 2024-2025 due to security threats in the Red Sea and Bab el-Mandeb Strait. Many vessels that would typically transit the Suez Canal have been diverted around Africa’s southern tip, adding thousands of miles and significant costs to their voyages. While this route remains a safe alternative, it has increased global shipping times and fuel expenses.

➖ How Did We Get Here?
The escalation of Houthi attacks on commercial vessels in the Red Sea has forced many companies to avoid the region entirely. While international navies have increased patrols, the risk of attacks remains high, leading to a surge in rerouted traffic through the Cape of Good Hope. This shift has placed additional strain on global supply chains.

➖ How Much Does It Cost, and Who is Paying?
The rerouting has added 10-14 days to many shipping journeys, significantly increasing fuel costs. Insurance rates have also risen as shipping companies factor in longer voyages and higher operational risks. Consumers and businesses importing goods from Asia and the Middle East have seen delays and price increases as a result.

➖ Who Benefits from the Disruption?
Shipping companies specializing in longer-haul routes and ports in Southern Africa have seen increased traffic. Oil traders and commodity transporters have also taken advantage of market fluctuations caused by route changes. Some logistics firms have secured higher rates for cargo diversion services.

➖ What Are the Alternatives?
Some companies have opted to continue using the Suez Canal under heavy security protection, while others have shifted cargo to air or rail transport. However, no clear maritime alternative currently matches the efficiency of the Suez Canal.

➖ What’s the Outlook?
Unless security conditions in the Red Sea improve, the Cape of Good Hope will continue to be a critical alternative for global trade. However, the longer distances and increased costs make it an unsustainable long-term solution for many shipping companies.

➖ What’s Going On?
The Arctic Northern Sea Route (NSR) has seen growing interest in 2024-2025 as melting ice has made it more navigable for longer periods. Russia has continued to promote the route as a key alternative to the Suez Canal, offering shorter transit times between Asia and Europe. However, the route still faces significant challenges, including extreme weather conditions, lack of infrastructure, and geopolitical tensions between Russia and Western nations.

➖ How Did We Get Here?
Climate change has led to a longer ice-free season in the Arctic, increasing the feasibility of commercial shipping along the NSR. Russia has heavily invested in icebreaker support and infrastructure along the route. However, Western sanctions on Russia due to the ongoing conflict in Ukraine have limited foreign investment and participation in Arctic shipping.

➖ How Much Does It Cost, and Who is Paying?
Shipping via the NSR can be faster than traditional routes, but it remains expensive due to specialized ice-class vessels, high insurance rates, and limited support infrastructure. Companies using the route, primarily Russian and Chinese shipping firms, have had to invest in additional safety measures to mitigate risks.

➖ Who Benefits from the Disruption?
Russia has positioned itself as the main beneficiary of the NSR, aiming to collect transit fees and develop Arctic infrastructure. Some Chinese shipping companies have also started testing the route to reduce dependence on traditional waterways like the Suez Canal.

➖ What Are the Alternatives?
Most global shipping companies still rely on traditional routes such as the Suez Canal and Strait of Malacca. Some have also explored rail transport between China and Europe as an alternative to Arctic transit.

➖ What’s the Outlook?
The NSR is expected to see increased use in the coming years, but it will likely remain a niche trade route due to operational difficulties and geopolitical uncertainty. Further development will depend on continued climate change impacts and the resolution of tensions between Russia and Western nations.

➖ What’s Going On?
The South China Sea remains a hotspot for geopolitical tensions in 2024-2025, with rising naval confrontations and disputes over territorial claims. China has continued to expand its military presence in the region, constructing artificial islands and deploying naval assets. Increased military patrols by the U.S. and its allies have heightened the risk of escalations, while commercial shipping faces periodic disruptions due to heightened security measures.

➖ How Did We Get Here?
Longstanding territorial disputes between China, the Philippines, Vietnam, Malaysia, and other nations have made the South China Sea a contested area. The region holds vast energy reserves and serves as a critical trade route for global commerce. China’s assertive policies, including restricting access to fishing grounds and interfering with foreign vessels, have escalated tensions.

➖ How Much Does It Cost, and Who is Paying?
Increased military activity has raised the cost of shipping insurance and security measures. Some cargo shipments have been delayed due to naval exercises and blockades. Countries dependent on South China Sea trade routes, including Japan, South Korea, and Southeast Asian nations, have faced indirect economic impacts.

➖ Who Benefits from the Disruption?
Military contractors and defense industries have seen increased demand for surveillance and security services. Some countries, like India and Australia, have positioned themselves as alternative trade partners to reduce reliance on Chinese-controlled waters.

➖ What Are the Alternatives?
Some shipping companies have started exploring routes through the Indonesian archipelago to avoid high-risk areas, though these add extra transit time. Rail and overland trade routes through Central Asia have also gained interest as alternative corridors for Asian exports.

➖ What’s the Outlook?
Without diplomatic agreements, tensions in the South China Sea will likely persist. Shipping companies must continue to navigate complex geopolitical risks while balancing security concerns with trade efficiency.