Global trade and geopolitics are deeply intertwined, with political tensions and regional conflicts often shaping the flow of goods and influencing supply chain stability worldwide. Donald Trump returning as US President marks the beginning of a significant shift in the global mobility landscape, with potentially wide-reaching consequences for economies, international relations, trade, and business operations. As countries and companies brace for these changes, many are preparing to navigate the complexities of a global economy that may see increased restrictions and new challenges to business practices.
In the Middle East, which has undergone significant changes since Trump left office in 2021, regional actors are closely watching to see how the new administration will respond to these evolving dynamics. On 7 November 2024, shortly after Trump won the U.S. election, the leader of Houthi, a political and armed group that control most part of Yaman, released a statement asserting that their operations in regional waters would continue. Al-Houthi also criticized Trump’s support for Israel, arguing that the president-elect’s stance would not bring the Middle East any closer to peace.
Since November 2023, the Houthis have repeatedly targeted commercial vessels in the Red Sea and Gulf of Aden. These incidents have discouraged operators from using the crucial waterway, threatening to stall trade as long as regional conflict endures. This disruption is already evident in cargo traffic through the Suez Canal, which connects the Red Sea and the Mediterranean and once carried 10-15% of global trade. Due to the escalated risks, shipping companies are increasingly rerouting shipments around the Cape of Good Hope, which extends transit times by 10-14 days and can triple freight rates.
Beyond cost implications, the longer routes mean increased fuel consumption, leading to higher greenhouse gas emissions and compounding environmental concerns. Ultimately, these rising shipping expenses are likely to increase the prices of consumer goods, contributing to global inflation if the disruptions persist.
For international freight forwarders, the increased incidents in the Red Sea have required contingency planning, as they may have to reroute shipments or increase security measures, both of which raise operating costs. For industries relying on just-in-time logistics, such as automotive and electronics, any added delay from rerouting through the Cape of Good Hope can disrupt inventory and supply chain timelines, which could further strain global production.
To face these challenges, companies are seeking greater resilience and flexibility in supply chains, adjusting networks, and exploring alternative solutions to support clients during geopolitical uncertainties. Maintaining stability across global supply chains in this time requires agility and innovative logistical strategies.
Many anticipate that the next U.S. administration will focus on pushing back against Houthi aggression. Trump’s defense advisors may urge a more assertive military response, contrasting with the previous administration’s approach, which they criticized as insufficiently aggressive. Former U.S. ambassador to Yemen, Gerald Feierstein, argues that achieving a ceasefire between Israel and Hamas could lessen Houthi attacks, noting that a recent truce in Gaza correlated with reduced Houthi activity. However, a more forceful U.S. policy may find resistance among Gulf allies, who have previously discouraged open-ended military responses, advocating instead for decisive, but short, interventions.
This situation clearly highlights how global trade and geopolitics are connected. Shipping disruptions are creating a ripple effect across global supply chains. Investing in supply chain risk management tools and monitoring geopolitical dynamics will be essential to making informed, timely decisions. As your trusted logistics partner, we’re ready to provide alternative options like air freight to help ensure continuity. If these challenges continue, they may lead to lasting changes in logistics strategies for companies and governments worldwide. We understand the impact this may have on your supply chain, and we’re committed to closely monitoring the situation and keeping our clients informed of any developments.
