Suez Canal, Egypt. Axelspace Corporation / CC BY-SA 4.0 / Desaturated.

Chokepoints and vulnerabilities in global food trade

Physical ‘chokepoints’ along trade routes are critical to global food security. The importance of these chokepoints and the risks of closure or disruption are increasing, but such risks and their potential impact remain largely overlooked.

Authors: Johanna Lehne – Research Assistant, Energy, Environment and Resources, Chatham House; Laura Wellesley – Research Associate, Energy, Environment and Resources, Chatham House

Why chokepoints matter

Supply chains are only as strong as their weakest links. In global food trade, the most vulnerable links consist of a handful of ‘chokepoints’: physical points along trade routes that handle high volumes of important commodities. There are maritime chokepoints (straits and canals), coastal chokepoints (ports) and inland chokepoints (roads, railways and waterways) and global food trade depends heavily on these.

The Panama Canal, for example, handles 22 per cent of global soybean shipments annually, while each year the Mississippi River moves 20 per cent of global maize trade from the grain fields of the US Midwest to ports on the US Gulf Coast. Ukrainian and Russian ports along the Black Sea coast transfer 19 per cent of globally traded wheat on to ships bound for the Turkish Straits, the Mediterranean and beyond.

Key chokepoint grain trade throughput

A disruption at one or more of these chokepoints could have major impacts. Global food prices, supply in local markets, the livelihoods of traders and farmers, and the provision of food aid to vulnerable communities all depend on the continued movement of goods across borders and oceans.

Crucially, chokepoint disruptions may also add to political instability. Governments rely on the functioning of chokepoints to ensure sufficient supplies of affordable food for their populations. A poor wheat harvest in the Black Sea region, for example, contributed to protests across North Africa in late 2010 and early 2011; these protests became the Arab Spring.   

Major disruptions are rare but not unprecedented. Of the 14 chokepoints of systemic global importance, all but one (the Strait of Gibraltar) have seen at least one interruption to transit over the past 15 years.1 These incidents have ranged in duration from just a few hours to over a month. The most common disruptions are weather-related. Hurricane Katrina struck US Gulf Coast ports in 2005. Heavy rains have rendered Brazil’s poorly maintained roads impassable on numerous occasions, preventing the transportation of food shipments from farms in the interior to the country’s seaports. Other chokepoint disruptions – Russia’s official and de facto restrictions on exports, for example – are political in nature, or are related to armed conflict and insecurity. Most recently the Strait of Bab al-Mandab – one of three systemically important Middle East chokepoints, along with the Strait of Hormuz and the Suez Canal – has been the site of attacks on vessels, a spill-over effect of the ongoing conflict in Yemen.

Example disruptions to key chokepoints

The impacts of most of these disruptions have been largely localized to date. But as the global food system becomes ever more connected,2 the impacts of supply stoppages and high transport costs are likely to have knock-on effects along international supply chains. Populations in low-income food-deficit countries (LIFDCs) in North Africa increasingly rely on the movement of wheat out of Russia and Ukraine via that region’s congested ports and through the Turkish Straits. Although the Black Sea chokepoints are over 1,500 miles away from North Africa, the latter’s food-insecure communities would almost certainly feel the effects of a prolonged disruption to grain shipments along Russia’s railways.

The growing importance of chokepoints

The importance of food trade chokepoints is increasing. Transport infrastructure is coming under greater pressure as trade volumes grow. In 2000, the global transport system moved 354 million tonnes of grain; by 2015, that figure stood at 615 million tonnes.

Maize, wheat, rice and soybean trade 2000-15

What’s more, our reliance on international trade is increasing. Currently, four out of five people live in countries that depend on imports to feed their populations.3 Many countries around the world are almost wholly dependent on imports from the world’s breadbasket regions to meet domestic grain demand. Take Honduras, which sources 77 per cent of its maize imports and 88 per cent of its wheat imports from the US; a blockage of grain exports along the Mississippi or out of the Gulf Coast ports could have serious implications for the country’s food security. An even starker example is Djibouti. It depends on imports for virtually all of its cereal supply, and ultimately on the Black Sea region for almost three-quarters of those imports.

LIFDC grain import dependence on US, Brazil and Black Sea

Despite their criticality, chokepoints have received minimal attention. Current assessments of food security focus on conditions at household or national level that influence exposure to supply or price shocks. Import dependence is typically considered a source of price risk, with little consideration of the potential for physical supply disruptions. Data on patterns of transportation of grain and fertilizer are lacking, as is analysis of the systemic importance of trade chokepoints to food markets. This stands in contrast to analyses of energy security, where the risk of disruptions at chokepoints has long been a key consideration.

A new Chatham House report aims to fill this gap. Mapping trade data from resourcetrade.earth onto physical shipping routes, the report identifies vulnerable locations along trade routes and explores the potentially disastrous consequences of severe disruption at critical chokepoints. It highlights the need for governments to act now to mitigate the heightening risk of chokepoint disruption.

Increasing vulnerability

As climate change takes hold, the risk of disruption to food trade chokepoints will increase. The small-scale disruptions we see today will become more common, as will extreme weather events such as the drought that struck the US Midwest in 2012–13, causing water levels on the Mississippi River to drop and prompting restrictions on barge movements. Rising sea levels will lead to more frequent flooding, as seen at the Black Sea ports several times in recent years, and make coastal infrastructure more vulnerable to damage. An expected increase in the incidence of tropical cyclones, high winds and fog will likely bring interruptions to shipping through narrow straits and canals.

As well as direct impacts on food trade infrastructure, climate change will exacerbate resource stresses and threaten harvests, multiplying the risk of trade interruptions and infrastructure damage owing to conflict, insecurity and protectionism.

And climate change raises the risk of multiple disruptions occurring in different locations at the same time, compounding the impact of localized supply shocks on international markets. A worst-case scenario – one in which the Gulf Coast ports in the US were shut down due to a hurricane at the same time as key roads in Brazil were swamped owing to heavy rains – would cut off up to half of global soybean supply in one fell swoop.

Who’s most at risk?

Countries depend on chokepoints to different degrees. The importance of a chokepoint to a particular country depends not only on the share of that country’s imports that pass through it, but also on how easily alternative supply routes or sources of the commodity in question can be found. Another key factor is the vulnerability of a given country. The more food-insecure or fragile a state is, the larger the impact of a chokepoint disruption is likely to be.

The Gulf Cooperation Council (GCC) countries are especially exposed to chokepoint disruption. The region has some of the most food import-dependent countries in the world. These consumer markets rely heavily on grain exports from the Black Sea region, transported via a succession of chokepoints: the Russian and Ukrainian railways and ports, through the Turkish Straits and down through the Suez Canal. Gulf importers also rely on shipments coming northwards through the Strait of Hormuz and Strait of Bab al-Mandab. Over a third of GCC food imports pass through at least one chokepoint for which no alternative route exists. Historical links between food insecurity and political and social instability make the region’s high dependence on chokepoints a cause for concern.

GCC 2015 wheat imports through regional chokepoints

Inadequate policy responses

Investment in infrastructure in producer countries has been woefully lacking. The US’s inland waterways and railways are old, congested, and vulnerable to droughts and floods; its Gulf Coast ports are exposed to hurricanes and storm surges. Brazil’s roads are in poor condition and often blocked in poor weather. The Black Sea railways and ports urgently require investment, but regional instability stands in the way. Each of these regions must mobilize investment in the coming decades to avoid infrastructure problems worsening, but all face challenges in doing so.

Infrastructure investment issues in the US, Brazil and the Black Sea

Similarly, few import-dependent countries have taken action to address infrastructure risks. For many, addressing these risks presents a challenge because responsibility for chokepoints often lies with producing countries. The exception to this is China, which actively invests in overseas infrastructure to relieve pressure on existing chokepoints, diversify supply routes, and increase its operational footprint along its supply chains.

No international mechanism exists to manage the risk of a major food supply disruption. In oil markets, the International Energy Agency (IEA) manages supply risk through an emergency response system under which member countries agree to coordinate measures in the event of a disruption. Despite the significant risk posed by chokepoint disruptions, there is no coordinated international strategy for managing food chokepoint risk or responding to a major supply shock.

Five areas for action

Although addressing chokepoint risk is a long-term project, work must begin now for the necessary measures to be in place before climate change becomes a major source of disruption.

The report recommends five major areas for action:

  1. Integrate chokepoint analysis into mainstream risk management and security planning; e.g. governments in food-importing countries should undertake assessments of exposure and vulnerability to chokepoint risk at the national and subnational level.
  2. Invest in infrastructure to ensure food security; e.g. the G20 should establish a taskforce on climate-compatible infrastructure, establishing common principles and guidelines for critical infrastructure resilient to future climate impacts.
  3. Enhance confidence and predictability in global food trade; e.g. the WTO should strengthen rules to make it harder for governments to introduce ad hoc export restrictions on key agricultural commodities.
  4. Develop an emergency sharing mechanism and smarter strategic storage; e.g. strategic stock sharing and emergency response mechanisms should be agreed at regional level among exposed countries to coordinate actions and share the costs of risk management.
  5. Build the evidence base around chokepoint risk; e.g. the Agricultural Market Information System (AMIS) should work with governments to harmonize nationally reported, macro-level transport infrastructure and asset data.

Footnotes

1. Authors’ own analysis. For full details and sources, see Annex 2 in Bailey, R. and Wellesley, L. (2017), Chokepoints and Vulnerabilities in Global Food Trade, Chatham House Report, London: Royal Institute of International Affairs. 

2. See Benton, T. (2017), Food security, trade and its impacts, resourcetrade.earth.

3. MacDonald et al. (2015), ‘Rethinking Agricultural Trade Relationships in an Era of Globalization,’ BioScience, 65(3): 275-289.

4. Mischke, J. (2015), ‘Infrastructure finance: Myths and reality’, presentation at Chatham House Infrastructure Finance Conference, London, 23 November 2015.

5. US ASCE (2016), Failure to Act: Closing the Infrastructure Investment Gap for America’s Economic Future, prepared by the Economic Development Research Group, Reston: American Society of Civil Engineers, http://www.infrastructurereportcard.org/wp-content/uploads/2016/05/2016-FTA-Report-Close-the-Gap.pdf (accessed 16 Aug. 2016).

6. Ibid.

7. US Department of Transportation (2015), Beyond Traffic 2045: Trends and Choices, https://cms.dot.gov/sites/dot.gov/files/docs/Draft_Beyond_Traffic_Framework.pdf (accessed 18 Aug. 2016).

8. Poulden, G. (2013), ‘Brazil creaks under the strain of meeting Chinese soya demand’, 15 May 2013, China Dialogue, https://www.chinadialogue.net/blog/6013-Brazil-creaks-under-the-strain-of-meeting-Chinese-soya-demand/en (accessed 28 Apr. 2017); Salin, D. L. (2015), Soybean Transportation Guide: Brazil 2014, USDA Agricultural Marketing Service, July 2015, https://www.ams.usda.gov/sites/default/files/media/Brazil%20Soybean%20Transportation%20Guide%202014.pdf (accessed 28 Apr. 2017).

9. Azoulai, D., Dunlop, H. and Kuettel, B. (2013), ‘Big Bottleneck: A Weak Transportation Network Is Hurting Brazil’s Once-hot Economy’, [email protected], 20 December 2013, http://knowledge.wharton.upenn.edu/article/big-bottleneckweak-transportation-network-hurting-brazils-hot-economy (accessed 28 Apr. 2017).

10. Ganelin, M. and Vasin, S. (2014), ‘Russian infrastructure: A big ship sails far’, industry report, Gazprombank, 15 July 2014, http://www.gazprombank.ru/upload/iblock/d4c/gpb_russian%20infrastructure_eng_150714.pdf (accessed 16 Aug. 2016).

11. European Bank for Reconstruction and Development (2015), ‘EBRD and Ukraine’s agriculture sector partner for reform’, 21 May 2015, http://www.ebrd.com/news/2015/ebrd-and-ukraines-agriculture-sector-partner-for-reform.html (accessed 16 Aug. 2016).

12. OECD (undated), Kazakhstan: Sector Competitiveness Strategy, Competitiveness and Private Sector Development report, Eurasia Competitiveness Programme, https://www.oecd.org/globalrelations/47014312.pdf (accessed 17 Aug. 2016).

13. Deloitte (undated), Infrastructure & PPP in Ukraine, InvestUkraine report, http://ccipu.org/it/argomenti/infrastructure (accessed 17 Aug. 2016); Ganelin, M., Yakovlev, Y. and Tayts, M. (2015), Russian Infrastructure: To build or not to build – that is the question, industry report, Gazprombank, 3 July 2015, http://www.gazprombank.ru/upload/iblock/0ba/GPB_Infrastructure_update_030715.pdf (accessed 16 Aug. 2016)