Climate Change is Disrupting Global Trade
The unprecedented drought in Panama is causing significant disruptions in international trade by leading to a drastic reduction in water levels in the Panama Canal, a critical link for global maritime exchange. The drought, deemed the most severe in the canal’s 143-year history, has resulted in restrictions reducing transport capacity by at least 15 million tons over the course of this year.
Ports in Panama, Nicaragua, Ecuador, Peru, El Salvador, and Jamaica are experiencing the most substantial impacts, with between 10% and 25% of their total maritime trade flows affected. However, the effects of the drought are felt in regions as distant as Asia, Europe, and North America. It is projected that canal passages will halve, reaching 18 ships per day by February, compared to the usual 36 in normal times. Economies heavily reliant on the canal should brace for further disruptions and delays.
To address these concerns, PortWatch, an open platform launched by researchers from the IMF and the University of Oxford, is introduced. This platform utilizes real-time satellite data to track nearly 120,000 cargo ships and tankers worldwide, representing over 99% of global maritime trade. It provides daily estimates of trade volumes at 1,400 ports and over a dozen critical points, such as the Panama Canal.
PortWatch simulates international spillover effects from port closures and maps disruptions in supply chains on an interactive map. Furthermore, it facilitates climate scenario analysis, providing modeled risk estimates for various climate extremes. The platform also issues alerts regarding potential and actual trade disruptions following major disasters.
Read full article: https://www.imf.org/en/Blogs/Articles/2023/11/15/climate-change-is-disrupting-global-trade?s=08