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Although the pandemic-induced disruptions in global supply chains have eased and water flow in the Panama Canal has improved, new threats to international trade have emerged.
The Suez Canal remains blocked for most commercial ships, heightening concerns over trade in the South China Sea. Recent clashes between Chinese military forces and neighboring countries, including the Philippines, have intensified tensions in this disputed region. China claims the area as its own, sparking anger from neighboring nations that accuse Beijing of intruding into their exclusive economic zones.
The South China Sea, covering 3.5 million square kilometers between China, Taiwan, the Philippines, Indonesia, Vietnam, Thailand, Cambodia, and Malaysia, handles about one-third of global maritime trade. According to the United Nations Conference on Trade and Development, this area sees 40% of global oil trade annually. Estimates by the Center for Strategic and International Studies suggest the value of goods passing through the South China Sea ranges from $3.6 trillion to $5.3 trillion. Researchers at the University of North Carolina estimate that trade through the South China Sea and the East China Sea totals $7.4 trillion annually. The disputed waters are also rich in natural resources, including 5.8 trillion cubic meters of natural gas, 11 billion barrels of oil, and significant rare earth deposits.
Meanwhile, potential strikes by workers at Canada's two largest rail companies could disrupt supply chains across North America. If labor unions and Canadian National Railway and Canadian Pacific Kansas City do not reach an agreement, simultaneous strikes could halt the transport of grains, beans, potash, coal, lumber, and significantly impact oil, chemicals, and automobile shipments. Such disruptions could lead to billions of dollars in losses and severely affect the U.S. supply chain. Both companies have emphasized their commitment to operating other parts of their networks but acknowledged the severe consequences of a strike.
[Information sourced from CNN, Deutsche Welle]
