Shipping Routes of global trade are utilized for the transport of essential food, spices, medicine, clothing, electronics, and other commodities. Almost everything you rely on every day are able to reach you due to these major shipping routes. If trade remained confined between neighboring countries and cities, most things you consider essential for everyday life might not be accessible to you today.
Around 90% of global trade is dependent on maritime transport. However, most people are oblivious to the importance of maritime transport as their contact with the industry is scarce, if not non-existent. When they hear “shipping”, consumers mostly think of the products they order online and how it reaches them.
What they don’t know is that before those products are stored in companies’ warehouses, they go on a long voyage through various global shipping routes.
Even entrepreneurs, especially beginners, might not know a lot about global trade and the shipping routes it relies on. Global maritime transport is a gargantuan industry and studying it can’t be done overnight, but this article will discuss the most important things people should know about.
Most ocean freight travels through five major routes
There are hundreds of waterways throughout the world, but most of the global trade relies on five major shipping routes. You’ve likely consumed or used products that went through one of these routes.
1- The English Channel
The English Channel, which links the North Sea to the Atlantic Ocean, is the busiest shipping route in the world. It’s responsible for a quarter of all trade between the EU and the UK – 22% of the UK’s imports from the EU and 30% of the EU’s imports from the UK. Around 500 ships pass through the channel every day.
2- The Suez Canal
The Suez, located northeast of Egypt, sees around 52 ships passing per day and is one of the busiest shipping routes in the world, and is the longest canal without locks. Opened in 1869, the canal connects the Mediterranean Sea to the Red Sea, providing the shortest path between Europe and Asia.
3- The Strait of Malacca
Almost a quarter of international maritime trade goes through the Strait of Malacca. It’s the shortest route between the Indian and the Pacific Oceans, connecting most Asian economies such as China, Japan, Taiwan, Singapore, and Malaysia. It also serves a major role in the transport of energy products, with around a quarter of oil transported by sea passing through it.
4- The Panama Canal
One of the greatest engineering feats of humanity, the Panama Canal cuts the travel time between the Pacific and the Atlantic Ocean from 67 days to just 10 hours. It’s a critical route for trade between Asia and North America; used by around 14,000 ships and responsible for over USD$270 billion worth of goods every year.
5- The Danish Straits
The Danish Straits connect the Baltic Sea to the North Sea, serving as a critical shipping route for trade between Russia and Europe. In 2016 alone, around 3.2 million barrels per day of crude oil and petroleum flowed through the straits, making it an essential shipping route for Russia’s crude oil exports.
Some major shipping routes are man-made
Humanity has built a lot of artificial waterways but the most important among them for global trade are the Suez Canal, Panama Canal, and Kiel Canal. Apart from being marvels of engineering, they prove that waterways need to be improved to keep up with the growth of the maritime transport industry.
In 2016, a USD$5.25-billion expansion project made the Panama Canal capable of accommodating mega-ships. After the expansion, the canal was capable of handling vessels carrying containers three times it previously accommodated.
The Suez Canal is currently amidst a USD$10-billion expansion project slated to double its capacity and triple its annual revenue. Currently, the canal is so narrow that it can’t accommodate two-way traffic.
Disruptions to these routes are costly
A testimony to the importance of these shipping routes happened just recently. The Suez Canal was blocked by the mega-ship Ever Given for six days in March 2021, and it was estimated the delayed goods will cost USD$400 million per hour, and an additional USD$9 billion worth of trade will be impacted every day the canal remains blocked.
An increase in oil prices was linked to the blockage and it put more pressure on markets that were already on the brink of collapsing. Major shipping routes around the world have been closed in the past, be it due to blockage, natural disasters, or international conflict. Whatever the reason may be, even the smallest disruptions to these routes have a hefty cost that ripples across the world economy.
Piracy remains a threat
The Golden Age of Piracy is long gone, and pirates no longer have the terrifying image they used to have. Today, people have a romanticized view of pirates, thanks to their depiction in mainstream media. However, real pirates still pose a threat to the maritime industry. Piracy hotspots still exist in the waters of West Africa, in the Singaporean Strait, and throughout South America — posing a threat to both crew and cargo.
While there are technologies such as GPS tracking apps that help shipping lines reduce the risk of piracy in the open sea, the threat of piracy still forces some shipping companies to shift to air transport or take less optimal routes to prioritize safety, resulting in higher operational costs, increased fuel consumption, and a larger carbon footprint.
The shipping industry and global trade can seem like an overly complicated subject that only industry experts understand. While true to some extent, having a good understanding of its scale and scope isn’t as difficult as you might think. The things discussed above should help you get an accurate picture of shipping routes and their role in the world economy.