Global supply chains are confronting simultaneous disruptions at two critical choke points — the Red Sea and the Strait of Hormuz — a combination that is compounding, not merely adding to, the pain for shippers, according to Oliver Sawbridge, senior director at Zero One Hundred, a peer networking group focused on AI disruption and supply chain resilience.

Unlike past chokepoint crises, when companies could pivot to an alternative corridor, both major routes between Asia and Europe are now compromised at the same time, eliminating the usual fallback options. The Red Sea feeds into the Suez Canal, the shortest sea route between Asia and Europe — before the current disruption, the corridor for roughly a third of global container traffic — while the Strait of Hormuz is one of the world's most important passages for oil and liquefied natural gas shipments, handling about a fifth of the world's oil consumption and a fifth of globally traded LNG.

"When a chokepoint is disrupted, it quietly assumes that another one is still open," Sawbridge said. "But at the moment, we're getting a double whammy and it's more than double the pain."

The knock-on effects are measurable. Rerouting cargo around the Cape of Good Hope — the workaround most major container lines, including Maersk and Hapag-Lloyd, adopted after attacks on commercial vessels by Yemen's Houthi forces began in late 2023 — adds roughly three weeks of additional travel time in each direction between Asia and Europe. The scale of the shift is visible in canal traffic: UNCTAD reported Suez Canal transits down by more than 40% in early 2024 as the diversions took hold. The longer passages drive up fuel consumption, tie up vessels and containers for longer stretches — absorbing effective fleet capacity rather than relocating it — inflate the working capital tied up in cargo that spends more days in transit, and strain insurance markets. Cargo insurance rates have surged from 0.6% to as much as 2%, with a war risk premium layered on top. Ports along the Cape of Good Hope route are reporting traffic increases exceeding 100%, yet they lack the infrastructure to handle the volume — a problem measured in years to fix, not days.

"One food and drink company we're working with reported that containers are not consistently landing at the intended ports that they're going to. So that's what I mean by these alternative routes are sort of constantly degrading," Sawbridge said.

Sawbridge cautioned that businesses focused on individual disruption events risk misallocating their attention. He pointed to companies that were advised to prioritize the South China Sea as the highest-risk corridor and, as a consequence, were unprepared when disruptions escalated in the Gulf. He identified climate change and geopolitics as the two structural forces that most consistently elevate chokepoint risk, and argued that planning frameworks should be built around those persistent drivers rather than around specific incidents. Recent history reinforces the point: drought-driven restrictions sharply cut the number of vessels able to transit the Panama Canal in late 2023, showing how climate alone can constrain another of the world's key maritime arteries.

The Northern Sea Route, increasingly viable as Arctic ice recedes due to climate change, illustrates how geopolitics shadows even emerging alternatives. Russia controls access to the Bering Strait and operates more icebreakers than any other country, meaning a vessel that becomes stuck during that passage would likely depend on Russian assistance — a geopolitical dependency that cannot be planned away.

Sawbridge used a client case study to underscore where resilience strategies break down. One company responded to Middle East disruptions with a dual-sourcing strategy, using the supply chain visibility platform Altana to identify its 100 riskiest suppliers and diversify away from them. The effort succeeded at the supplier level but failed to map the physical chokepoints those suppliers sat behind — and both alternative suppliers turned out to ship through the same disrupted corridors: the Red Sea and the Strait of Hormuz.

"It definitely needs to be a joined-up process throughout the supply chain and an integrated process for the business," Sawbridge said.

The upshot, in Sawbridge's assessment, is that resilience must become the bedrock of supply chain planning. As geopolitical and climate-driven shifts — beyond tariffs — reroute global freight, shippers face higher costs, extended transit times, strained insurance markets, and port infrastructure pushed beyond its capacity. The duration of the rerouting is the variable to watch: Cape-route port upgrades are measured in years, and the forces Sawbridge identifies behind the disruptions — geopolitics and climate — are structural rather than episodic.

This article is based on a transcription of the original interview. Source: FreightWaves