War and Climate Drive Shipping Costs Higher, Hitting Developing Importers Hardest

Global container freight rates have surged as two simultaneous shocks compound: Houthi attacks in the Red Sea force vessels onto longer Cape of Good Hope routes, while low water levels in the Panama Canal — a direct consequence of an El Niño-intensified drought — restrict transit capacity. The combined effect has lengthened average shipping times and inflated freight costs, with spot rates on key Asia-to-Europe lanes more than doubling from their 2023 lows.

The distributional impact is structurally unequal. Wealthy nations with diversified supply chains absorb higher freight as a modest consumer price bump. Countries in West Africa, the Pacific Islands, and Central America that import 60–80% of their food staples face a compounding inflation: higher freight costs layer onto existing currency depreciation and reduced aid flows, directly eroding food purchasing power for the poorest households. Shipping is a hidden tax on import-dependent poverty, and its burden is invisible in climate finance accounting.

Watch whether the International Maritime Organization's 2023 emissions strategy — which aims to cut shipping's carbon footprint by shifting to alternative fuels — creates a third cost pressure on top of conflict and climate disruption, or whether it accelerates a long-overdue restructuring of global trade logistics.