The sheer costs of disruptions in 2024 are likely to make this a memorable year to supply chain experts. From Panama Canal issues, to the blockade of the Red Sea by Houthi rebels, the year has been plagued with disruptions that put an end to an era of stability after the COVID-19 pandemic.

Given how prominent these disruptions have been, we wanted to look more closely at how they have impacted the world of logistics over the last couple of months. And, most importantly, using recent data published by the United Nations, we wanted to provide an estimate of how much these disruptions cost to the global economy—an impact that is now estimated at well over $63 bn.

But let’s start with the basics. What is going on in the world of supply chains? 

The last couple of months have proven to be extremely challenging for logistics operators for one key reason: two of the most important trade routes in the world are suffering from meaningful disruptions. On the one hand, Panama Canal trade activity has slowed down significantly as a historic drought has brought water levels in the country to a drastic low. This, in turn, has diminished the amount of vessels that can cross the Canal on any given day, effectively blocking trade between the Pacific and Atlantic oceans. On the other hand, Houthi rebels in Yemen have embarked on an active campaign to attack vessels headed to the Suez Canal. To date, there are 160 registered attacks in what Houthis consider an act of solidarity with Palestine given its war with Israel—although recent reporting suggest Russia might be behind providing coordinates for the attacks.

The impact of both events cannot be understated. The Suez and Panama Canal crises have heavily disrupted the ability of container ships to navigate across the oceans. As the graph below shows, in October of 2023 alone, it was estimated that some 2,286 vessels crossed the Suez Canal and 987 crossed the Panama Canal in the same month. By February of 2024, they had fallen to 1,098 crossings at Suez and 656 in Panama.

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The immediate impact of these disruptions came in the form of trip length. In the Americas, given the Panama Canal blockage, vessels had to readjust to neighboring ports relying on ground transportation to cross from one sea to another. In Suez, meanwhile, the blockage of the Suez Canal has forced vessels to re-route to the Cape of Good Hope adding weeks to journeys. Not surprisingly, as the graph below shows, the average nautical miles traveled in seaborne trade jumped from 5,047 in 2023 to a projected 5,186 in 2024.

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Together, the effects of the Panama Canal and Red Sea disruptions would be enough to turn the shipping world on its head. But 2024 has had even more disruptions including major labor strikes in the U.S. East Coast and the threat of tariffs from former president Donald Trump pushing companies to expedite shipments ahead of the November election. All this in tandem resulted in drastic increases in the cost of shipping a container across the sea. On average, Drewry estimated that the average price line for a 40ft container jumped from $2,725 in May of 2024 to $5,901 in July as shown in the graph below—a 116% increase in price in just three months.

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Given these drastic rises in prices, it was to be expected that the global economy would come to suffer. More so when considering that over 80% of all products in the world are transported by sea. But until recently, we had no estimates of just how meaningful these disruptions had been to the global economy. Now, the U.N. has released official estimates of the impact of the Panama Canal crisis paired with the Suez blockade. In all, it is estimated that global GDP lost 0.06 percentage points in 2024 due to these disruptions. The impact was even worse for small island nations which are highly dependent on global trade for their survival, losing as much as 0.11 percentage points of their GDP from disruptions.

Now, it must be noted that the overall cost to GDP was not the equal result of all disruptions listed above. The UN went further in their analysis and was able to isolate, month to month, which share of the overall growth in costs to ocean transportation came from a particular disruptions. To do this, as the graph below shows, they used the Baltic Dry Index—a metric similar to the Drewry index shared before—. Towards the end of 2023 and beginning 2024, the bulk of disruption price changes were a result of Panama Canal issues. But February, however, problems with Red Sea logistics began to play an even larger role in the overall impact to the economy, becoming the lead driver of change in May.

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All the above suggests just how much the global economy relies on trade. In a year full of disruptions, with the Red Sea under attack and the Panama Canal blocked, 0.06% of global GDP disappeared. Based on the last figures of global GDP, this is equivalent to $63 bn lost from the global economy, with a particularly acute pain felt by developing countries and small island nations. 

So, 2024 is likely to go down in history as one of the most important years to the logistics industry. It is the year in which disruptions ruled over supply chains and companies had to innovate in their abilities to deliver products and the routes used across the planet. The year in which disruptions caused us to lose a considerable share of the economy. And most importantly, the year in which we noticed how important trade is to the world economy and how shocks to our current structure can impact us all.