Climate Change is Disrupting Global Trade
IMF Blog, November 15, 2023
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- Authors: Serkan Arslanalp, Robin Koepke, Alessandra Sozzi, Jasper Verschuur
- Published: November 15, 2023
Key findings on the Panama Canal drought and trade impacts
- Around 1,000 ships pass through the Panama Canal each month carrying a total of over 40 million tons of goods—about 5 percent of global maritime trade volumes.
- The canal is experiencing the worst drought in the canal’s 143-year history.
- Droughtrestrictions imposed amid insufficient rainfall at the Gatún Lake, which feeds the canal, have reduced throughput by some 15 million tons so far this year.
- Ships have faced an additional six days in transit.
- Ports in Panama, Nicaragua, Ecuador, Peru, El Salvador and Jamaica are suffering most from these delays, with 10 percent to 25 percent of their total maritime trade flows affected.
- The drought’s effects extend to Asia, Europe and North America.
- Canal passages set to halve to 18 ships per day by February, down from 36 in ordinary times.
- Economies reliant on the canal for trade should prepare for more disruption and delay.
Broader climate-trade risk and maritime infrastructure vulnerabilities
- Amid climate change, droughts, floods, tropical storms and other disasters are becoming more common and pose a serious threat to maritime infrastructure.
- Disruptions at major maritime pinch points can reverberate through international supply chains and global trade flows.
PortWatch platform: capabilities and scope
- PortWatch is an open platform launched by researchers from the IMF and the University of Oxford to help policymakers prepare for trade disruptions caused by shocks like climate extremes and decide how to respond.
- The platform uses real-time satellite data to track nearly 120,000 cargo ships and tankers worldwide—over 99 percent of global maritime trade.
- PortWatch provides daily estimates of trade volumes at 1,400 ports and more than a dozen pinch points, such as the Panama Canal.
- PortWatch simulates international spillovers from a port closure and plots disruptions to onward supply chains on an interactive map.
- PortWatch enables climate scenario analysis, providing modeled risk estimates for a range of climate extremes.
- PortWatch alsosends alerts on potential and actual trade disruptions after major disasters.
Policy implications and recommended actions
- Policymakers should prepare for more disruption and delay in economies reliant on the canal for trade.
- Use of tools like PortWatch can inform contingency planning, targeted mitigation, and timely response to maritime trade disruptions caused by climate extremes.
This blog was co-authored by the PortWatch team, which includes Parisa Kamali. See the press release: IMF and University of Oxford Launch “PortWatch” Platform to Monitor and Simulate Trade Disruptions.