Will a Gaza Ceasefire Cut Global Maritime Carbon Emissions?

Tensions in the Middle East persistently affect global shipping.
As a crucial link between Europe and Asia, the Suez Canal facilitates roughly 30% of the world's container traffic.

Yet, recent times have seen a significant decline in the utilisation of this route due to armed conflicts that targeted maritime logistics.

The details of the Red Sea shipping crisis

Since November 2023, more than 100 maritime incidents initiated by Houthi rebels from northwest Yemen have disrupted shipping operations in the Red Sea.

These rebels have sunk two ships, seized one and claimed the lives of at least four sailors.

This surge in piracy and hostilities has compelled many shipping companies to alter their usual paths.

Instead of traversing the Red Sea, vessels are now navigating around the southern tip of Africa, a detour that is severely less efficient and environmentally damaging.

According to a study by INVERTO, a unit of Boston Consulting Group, this change in route causes the emission of an extra 35.7 million tonnes of CO₂ — equivalent to the yearly emissions from 7.8 million cars.

Between September 2023 and September 2024, the Suez Canal witnessed a substantial drop in activity, from 2,133 vessels to 999.
However, with the recent ceasefire in Gaza, there has been a positive shift.

The Houthi rebels have begun releasing captives, starting with individuals from the seized cargo ship, Galaxy Leader.

Additionally, ships — except those from Israel — can safely pass through the Red Sea, as long as the ceasefire persists.

This crucial development hints at a potential de-escalation of dangers in the region, potentially encouraging logistics operators to revert to the shorter Suez passage.

Operational delays and cost implications

The instability in the region breeds significant disruptions within the global supply chains, primarily by extending transit times and elevating shipping costs.

Companies that rely on the 'just-in-time' inventory model find these disruptions particularly troublesome.

This model, which minimises stock levels to cut down on storage costs, forces companies to stockpile higher quantities of inventory as a buffer against unpredictable delays, tying up capital and decreasing financial efficiency.

“The impact on the environment of Red Sea disruption should not be underestimated. Cargo ships are large emitters of CO2 and this is forcing them to travel thousands of extra miles to reach Europe,” explains Patrick Lepperhoff, Managing Director at INVERTO.​​​​​​​

“The ceasefire deal between Israel and Hamas – if it holds – may bring greater stability to the region and allow more shipping to return to the Red Sea through the Suez Canal."

This potential reduction in travel distances would not only curb emissions dramatically but also enhance the sustainability profile of the shipping sector.

Long-term impacts on supply chains

Looking ahead, the shipping industry may continue to face elevated costs due to speculated rises in shipping tariffs and rates.

Patrick adds: "Extended lead times could pose two distinct challenges for businesses: delays and operational issues and an additional increase in costs due to increased shipping rates and tariffs if they are introduced.

”The ongoing unrest, unless adequately addressed, will inevitably compel businesses to balance cost management with emission reductions.

"Hopefully the ceasefire in the Middle East brings peace in the long term. That would bring with it the potential for shipping in the region to return to normal."

This maritime turmoil underpins the vast and profound effects of geopolitical unrest on global supply networks, highlighting the critical need for fortified resilience and sustainable practices to navigate future disruptions.

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