Pedro Miguel locks along the Panama Canal. Photo: Gonzalo Azumendi via Getty Images.
3. Hazards to Chokepoint Operation
Key points
- The potential drivers of disruption span slow-onset climate impacts, extreme climate events, institutional failure, political interference, physical attack and cyberattack.
- Major disruptions to food system chokepoints are rare but not unprecedented, and are likely to become more frequent and severe as climate impacts and resource insecurity worsen. Climate change is a hazard multiplier and will likely aggravate underlying socioeconomic and political stresses.
- Disruption of any one chokepoint is unlikely to have a serious impact on global food security, but the compounding effect of concurrent trade dislocations at multiple chokepoints could be significant. In a climate-changed world, the risk of such concurrent dislocations is likely to rise.
- Only one of the 14 chokepoints (the Strait of Gibraltar) has been free from disturbance over the past 15 years; the most at-risk chokepoints are the US inland transport corridors, the Black Sea railways and ports, and the ports of southern Brazil.
- The South China Sea could become a de facto chokepoint in the near future.
Food trade chokepoints are exposed to diverse threats of varying severity. In many instances, these threats are not hypothetical but real, generating discernible impacts in terms of transport costs and delays. In isolation, disruption of any one chokepoint is unlikely to have a serious impact on global food security: in the wake of a storm, for example, the recovery period tends to be fairly short, and in most cases alternative sources of supply or trade routes exist that allow for the system to recalibrate temporarily. But the cumulative effect of concurrent trade dislocations at multiple major chokepoints would threaten to interrupt strategic supply routes, undermine system efficiency and amplify price spikes.
3.1 Disruptive threats to food system chokepoints
Disruptive threats to food system chokepoints broadly fall under three categories: weather and climate hazards; security and conflict hazards; and political and institutional hazards. Major disruptions are rare, but are not unprecedented (see Figure 19). Key threats to maritime, coastal and inland chokepoints – and examples of their impact – are discussed below.
Figure 19: Examples of recent chokepoint disruptions
— Source: Authors’ analysis; further details of each disruption, together with references, may be found in Annex 2.
Figure 19: Examples of recent chokepoint disruptions
3.1.1 Weather and climate hazards
Weather poses both acute and chronic threats to the smooth operation of chokepoints. The cumulative impacts of high and low temperatures, heavy rainfall, drought, high winds, storms and storm surges can reduce the efficiency, integrity and capacity of transport infrastructure, potentially leading to temporary but severe disruptions.
Climate change will have a multiplying effect on weather-related hazards. While changes in average temperature and rainfall are expected to unfold gradually – and may lessen weather risks in certain regions – these changes are predicted to have a compounding and non-linear effect in terms of their contribution to extreme weather conditions and acute events.145 By way of example, researchers estimate that a sea-level rise of one metre would render a one-in-100-year flood event in the Indian city of Kolkata 1,000 times more likely.146
Weather poses both acute and chronic threats to the smooth operation of chokepoints
Over time, weather-induced wear and tear heightens infrastructural vulnerability to extreme climate events, which themselves are expected to intensify in severity and frequency as climate change progresses.147 Shorter intervals between extreme events may make both routine maintenance and disaster recovery more challenging, and limit the time available to prepare for the next shock.148 In the absence of efficient and robust response and recovery plans, each high-impact event may have a compounding impact upon the next, undermining both the short-term and long-term integrity of physical structures.
3.1.1.1 Rainfall extremes
Heavy rainfall and surface flooding pose a risk to port infrastructure and storage facilities. Impacts will be greater where options for shifting trade to other modes of transport and export routes are limited. For example, in the case of disruption to US waterways, congestion on roads and railways could limit the scope to transport grain exports by truck or train. Flooding and drought as a result of climate change are forecast to bring more regular interruptions to trade along US transport corridors;149 the 2012 drought that caused water levels along the Mississippi to fall to record lows severely delayed the delivery of fertilizers to farmers in the Midwest.150 Extremes in rainfall also pose an operational hazard to man-made canals: a particularly strong El Niño event in the spring of 2016 brought long periods of dry weather to Central America, causing water levels to drop in the Gatún and Miraflores lakes either side of the Panama Canal and leading to the introduction of depth restrictions that affected nearly a fifth of vessels using the canal.151
3.1.1.2 Sea-level rise
Climate change will result in higher sea levels due to thermal expansion of the oceans and meltwater from glaciers and ice sheets. Considerable uncertainty surrounds the modelling of sea levels, but the best available science anticipates a global rise of 0.44–0.74 metres above 1986–2005 levels by 2100.152 It is important to note that this may be an underestimate, given the potential for non-linearities and tipping points to create faster change than many models currently capture.153 Higher sea levels will lead to more damaging storm surges that threaten port and coastal structures. The port of New Orleans on the US Gulf Coast and the Dutch port of Rotterdam, northeast of the Dover Strait, are among the most exposed to storm surges and high winds in terms of at-risk asset value and population size,154 while the integrity of coastal structures in Brazil, including major port areas, is expected to be compromised by climate change impacts on wave height and sea level.155
3.1.1.3 Tropical storms
While storm activity is influenced by a range of factors,156 available evidence suggests that rising ocean temperatures are likely to bring more frequent and severe storms and tropical cyclones.157 Stronger storms are likely to combine with higher sea levels to produce more severe storm surges and greater damage to infrastructure.158 Climate change may bring cyclone activity to the Strait of Hormuz.159 Meanwhile, ports along the Gulf Coast of the US are already exposed to tropical cyclones.160 An assessment of the economic risks posed by climate change to US infrastructure envisages up to US$50.6 billion worth of annual coastal storm damage being wrought on Florida’s infrastructure within 25 years.161
The integrity of coastal structures in Brazil, including major port areas, is expected to be compromised by climate change impacts on wave height and sea level
3.1.1.4 Climate change as a hazard multiplier
Climate change is likely to aggravate socioeconomic and political risks. Extreme weather events and more frequent harvest failures are expected to increase human displacement, indirectly amplifying the risks of inter-group violent conflict and civil war by exacerbating conflict drivers such as poverty, economic shocks and localized resource scarcity.162 As coastlines and maritime borders are redrawn by rising sea levels, the risk of territorial disputes may increase. Climate-induced food supply shortages may prompt the more regular imposition of unilateral trade measures. One preliminary analysis found that a global agricultural production shock that would have been defined as a one-in-100-year event in 1951–2010 could become a one-in-30-year occurrence by 2040, increasing the risk of export bans and food price crises.163
3.1.2 Security and conflict hazards
Transnational trade routes for critical resources often involve transit through conflict-affected or weakly governed areas, with the result that certain chokepoints are at risk from instability (see Figure 20). For example, the Suez Canal, Turkish Straits, Strait of Bab al-Mandab, Strait of Hormuz and ports in the Black Sea all border on, or are located in, states for which the Fund for Peace has issued a warning, alert or high alert about the possibility of state failure.164
As well as having direct impacts on operations and infrastructure, political and social instability can affect chokepoints indirectly. For example, ongoing conflict has troubled potential investors in the Black Sea;165 in 2014, foreign direct investment (FDI) in the Black Sea region was less than 2 per cent of GDP, and gross foreign investment had fallen to its lowest level since 2008.166 Populations displaced by conflict can also disrupt chokepoints. For example, migration across the Dover Strait in 2015 and 2016 caused traffic restrictions and border force strikes, leading to delays and higher transport costs for industry.167 168
3.1.2.1 Armed conflict
Globally, the incidence of armed conflict appears to be in long-term decline: the number of active conflicts worldwide fell from 63 in 2008 to 40 in 2015, though wars have also become more intense.169 Despite this global trend, it is reasonable to assume that certain regions will remain vulnerable to conflict for the foreseeable future, with implications for the security of particular chokepoints. The risk of conflict in the Middle East will remain, for example, with continued implications for the security of the Arabian chokepoints. Terrorist attacks in Egypt’s Sinai Peninsula, to the east of the Suez Canal, are becoming more common. The war in Yemen persists, with little hope for imminent peace. And the risk of armed conflict in Turkey is non-trivial: the country shares borders with conflict-ravaged Syria and Iraq; there has been a recent upsurge in terrorism in the region; and a recent coup attempt and subsequent crackdown in Turkey itself have highlighted concerns about stability. Moreover, the potential for an escalation in tensions between Turkey and Russia remains (see Box 5). Each of these factors has implications for the security of the Turkish Straits.
Figure 20: Status of ongoing armed conflicts, 2017
— Source: Council on Foreign Relations (2017), ‘Global Conflict Tracker’, updated 10 April 2017, http://www.cfr.org/global/global-conflict-tracker/p32137#! (accessed 11 Apr. 2017).
Figure 20: Status of ongoing armed conflicts, 2017
Box 5: Regional tensions and the Turkish Straits
In 2015 and 2016 tensions between Turkey and Russia rose, with their clash over the war in Syria fuelled further by military manoeuvres and power plays in the Turkish Straits (together with Turkey’s shooting down of a Russian military jet in November 2015).170 Accounts emerged of obstructive behaviour on the part of Turkish naval fleets, targeting Russian vessels transiting the Bosphorus Strait.171 At around the same time there was a reported spike in the number of Russian warships using the strait.172
Most analysts consider the Turkish government highly unlikely to actually close the strait, and the subsequent rapprochement between Turkey and Russia in 2017 also renders serious obstruction less probable. Nevertheless, reports in 2015 that Turkey had deliberately delayed Russian vessels waiting to pass through the strait173 indicate that the future blockading of this strategic chokepoint is not beyond the realms of possibility should bilateral tensions escalate again. The halting of traffic through the Bosphorus Strait in July 2016, though prompted by an attempted internal coup rather than interstate tensions and lasting only a few hours, threw into sharp relief the ease with which this key artery for food trade may be shut down when insecurity peaks.174
The South China Sea could become a de facto chokepoint in the future if long-running maritime territorial tensions in the region were to escalate (see Box 6).175 China’s contested ‘nine-dash line’ claim, and its expansion of anti-access and area denial capability in the area, have raised concerns around possible restrictions on maritime activity.176 Outright conflict has been seen as relatively unlikely, with avoiding a naval conflagration in one of the world’s busiest waterways in every country’s interest – not least China’s, given its reliance on the South China Sea for food and energy imports. But the possibility of an escalation remains a threat, especially given the lack of clarity over recent shifts in US policy.177
Box 6: The South China Sea: an emerging chokepoint
A series of confrontations have occurred in the South China Sea that indicate China’s intention and willingness to exert its power in the region and to challenge the principle of ‘international waters’.178 Reports that China has installed surface-to-air missiles on Woody Island in the Paracel archipelago,179 as well as satellite imagery of expanding capacity for military aircraft built on the atolls of the Spratly Islands,180 fuel fears that territorial tensions may rise to the point of outright conflict,181 resulting in restrictions on maritime traffic.182
For commercial shipping, entering a conflict area or carrying goods destined for a country involved in conflict brings the risk of interception or harassment by military vessels.183 Yet avoiding the South China Sea in the event of a conflict would require ships to navigate through the shallow waters of the Sunda Strait in Indonesia, or to divert course even further to the Lombok Strait and incur higher costs.184 Ships carrying grain along these routes would also vie for space with vessels transporting higher-value bulk commodities such as iron ore and coal, for which the Lombok and Sunda straits are key trading channels.185
All this would have serious implications for global food trade, and indeed for the estimated US$5 trillion in seaborne trade of all kinds that passes through the South China Sea each year.186 Ten per cent of imports of grain into low-income food-deficit countries (LIFDCs) depend on shipments via this route, and 36 per cent of globally traded rice moves through the South China Sea each year.
3.1.2.2 Piracy
Piracy tends to occur around maritime chokepoints for obvious reasons – such waters offer a high concentration of cargo-laden vessels with land close by. Eighty-five per cent of incidents occur within the waters of just 15 countries, with Indonesia (Strait of Malacca) and Somalia (Bab al-Mandab) accounting for 50 per cent between them.187 Piracy risk raises transport and insurance costs.188 While piracy in the Gulf of Aden and around the Strait of Bab al-Mandab is declining following a robust international response,189 the problem is worsening around other chokepoints: theft of cargo on ships transiting the Strait of Malacca has risen,190 although most incidents are relatively small-scale.191
3.1.2.3 Terrorism
Chokepoints may provide a target for terrorists wishing to disrupt trade or damage infrastructure. Security was stepped up in the Strait of Malacca in 2010, for example, in response to intelligence that a terrorist group was planning to attack oil tankers transiting the channel.192 Chokepoints may also provide a target for insurgencies as a means to secure access to food and energy or control distribution of high-value commodities to fund campaigns. For example, in Libya – which depends on imports for over 90 per cent of its strategic agricultural commodities193 – attacks by Islamic State of Iraq and Syria (ISIS) on ports to gain control of oil trade led to a 30 per cent decline in wheat imports over one year as international shippers reduced port calls.194
3.1.2.4 Cyber insecurity
Cyber insecurity is a rapidly evolving threat to navigational and communication infrastructure.195 It presents a growing hazard to all maritime trade, as well as to inland transport networks – like those in the US – that rely increasingly on automated and integrated communications systems.196
Cyber insecurity presents a growing hazard to all maritime trade, as well as to inland transport networks that rely increasingly on automated and integrated communications systems
Automated vehicles are likely to become commonplace in both commercial and military contexts, and dependence on cybersystems for safe navigation and communications will soon be the norm.197 As a consequence of these two trends, the incidence of hijackings using denial-of-service attacks is expected to rise.198 The heightened exposure of vessels to attack could be conducive to increased piracy in open waters, dissipating the current concentration of risk in and around major trading hubs and sea lanes. But for more sophisticated and organized criminal groups, the real targets are likely to be ports where multiple interconnected systems – navigation, cargo tracking, security – depend on satellite communications and where an attack on one system component is likely to trigger cascading impacts.199
The anticipated rise of denial-of-service attacks by pirates and criminal groups is particularly concerning around the Strait of Bab al-Mandab and the Gulf of Aden. Yemen and Djibouti are among the nations least well prepared for a cyberattack, both ranking 27th out of 29 (29 being the least well prepared) in a recent evaluation of risk exposure and resilience.200
3.1.3 Political and institutional hazards
The uninterrupted operations of transport infrastructure depend as much upon the political and regulatory context, and on the efficiency and quality of infrastructure management, as on the integrity of physical components. Bureaucratic inefficiencies, corruption and worker strikes at chokepoints all increase costs, and can restrict the movement of goods across borders or block them completely. Potentially most severe are trade restrictions imposed at chokepoints.
3.1.3.1 Bureaucratic inefficiencies and corruption
Sluggish border checks and inefficient trans-shipment operations delay trade through chokepoints. In Russia and Ukraine, for example, logistics and documentation procedures at the point of intake from rail and roads slow trans-shipment, constrain throughput capacity and soak up more time than the actual loading of ships.201 The World Economic Forum ranks Russia and Ukraine 83rd and 130th respectively out of 138 economies for efficiency of customs procedures, and 103rd and 74th for freedom from excessively burdensome government regulation.202
Inefficiencies such as these may be compounded by corruption. The Ukrainian transport system has faced corruption issues for a number of years.203 The United States Agency for International Development (USAID) recently pulled out of a customs reform project in Ukraine after a government drive to tackle bribe-taking at the port of Odessa lost momentum.204 In Brazil corruption has been a considerable barrier to infrastructure improvement in recent years. At least 11 major infrastructure projects, including road and rail improvements across Brazil, have been held up by the unfolding corruption scandal around Odebrecht SA, a major Brazilian construction firm, and Braskem SA, a petrochemical company.205
3.1.3.2 Worker strikes
Worker strikes, while seemingly parochial disturbances, have the potential to reverberate through national and even global markets. In 2015, for example, anger in Brazil over high government diesel prices and the financial burden of taxes and tolls along export routes prompted strikes in which truckers blockaded major roads linking the soybean-growing regions to the southern ports.206 More than 100 locations across 10 different states were subject to roadblocks, some of which remained in place for up to a week.207 The impact on export volumes was significant: with inventories held at ports sufficient for only a few days,208 total soybean exports in February 2015 were down 69 per cent on the same month in the previous year.209
3.1.3.3 Trade restrictions
Chokepoints also provide a locus for trade policies and political interference to impede the passage of commodities, such as through import or export restrictions and non-tariff barriers. Such measures, when imposed by a major exporter, can have a big impact on global prices: in 2008, phosphate prices rose by 800 per cent when China, one of the world’s largest producers,210 imposed a tariff of 135 per cent on its phosphate exports.211 The imposition of export controls by over 40 countries during the 2007–08 food price crisis amplified price rises, particularly for rice.212 In highly concentrated fertilizer markets, export restrictions by one producer can be enough to trigger dramatic price increases (see Box 7).
Ninety-one per cent of grain exports and 23 per cent of exports of potash and phosphate fertilizers are from countries that currently impose export restrictions or have done so in the past decade
Ninety-one per cent of grain exports and 23 per cent of exports of potash and phosphate fertilizers are from countries that currently impose export restrictions or have done so in the past decade.213
Box 7: Instability in fertilizer markets
In 2007–08, fertilizer prices tripled in the course of one year, before falling rapidly in late 2008.214 High agricultural commodity prices, driven in part by the expansion of biofuel markets and livestock production, encouraged farmers to plant more crops and increase fertilizer usage, in turn pushing up global fertilizer prices at a time when inventories were running low.215 The industry was slow in responding, owing in large part to the high costs of key inputs such as energy, natural gas and sulphur.216 The imposition by China of high export tariffs further exacerbated an already tight supply–demand balance.217
In response to the price peak, the industry has made a concerted effort to increase capacity. But constraints and bottlenecks along fertilizer supply chains may continue to contribute to fertilizer price volatility.218
Several factors contribute to risks in the fertilizer market:
- Input-intensive production brings upstream supply risk. The reliance on primary inputs means that fertilizer traders and producers are often exposed to wider trends in commodity markets, which may lead to upstream supply disruptions. In January 2017, for example, a series of plant shutdowns in Ukraine due to high natural gas prices, and a legal battle between a Russian ammonia producer and a Ukrainian pipeline operator, brought shipments of ammonia and urea from the Black Sea to a near standstill.219
- Conflict and insecurity pose a disruptive risk. The concentration of phosphate rock reserves in Morocco, Tunisia, Jordan and Syria raises concerns about the reliability of future supply should extraction, processing or export operations be interrupted by regional conflict:220 Syria’s exports of phosphate rock have decreased by 90 per cent since the civil war broke out221 and economic sanctions were imposed by its largest buyers;222 the Arab Spring had a considerable impact upon mining operations in Tunisia;223 and the rekindling of tensions in Western Sahara could result in significantly tighter global phosphate supply.224
- Serious supply dislocations may also occur downstream, during the transportation of fertilizers from production plants, ports or warehouses to farmers. Developing distribution networks takes time and requires knowledge of local markets and demand, and of soil conditions. It also relies on complex logistics, from unloading at ports and inventory management to securing inland transport capacity. Only a few fertilizer companies are vertically integrated to the extent that they operate down to the farm-gate level.225 The cost of transporting fertilizers along this final downstream stretch accounts for a substantial proportion of the final cost to the consumer.226
- The inelasticity of fertilizer supply in certain markets and along supply chains constrains market responsiveness to a supply shock. The input-intensity of fertilizer production limits capacity to respond rapidly to sudden spikes in demand; bringing new sources of supply online requires significant time and cost.227
- The oligopolistic nature of phosphate and potash markets introduces the risk of anti-competitive behaviour and market distortions.228 Production and distribution are dominated by cartels that continue to wield a high degree of control over global supply and prices, despite indications of a possible fragmentation of these markets in recent years.229
- Government intervention in fertilizer production or trade is a potential source of market distortion, both local and international.230 In India, for example, the public sector maintains a cumbersome procurement process, resulting in a 60- to 70-day lag between the decision by the government to import fertilizer and those imports reaching consumer centres.231
While the short-term impact on the consumer population of a price spike in fertilizers is much less acute than a direct problem with food supply, higher fertilizer prices ultimately feed through into higher retail food prices.232 Given the increasing importance of imported fertilizer in boosting crop yields and meeting growing demand for food,233 sustained investment in new capacity and infrastructure to overcome constraints and bottlenecks along supply chains will be required to avoid a return to the volatility seen in 2007–08.234
Non-tariff barriers in the form of phytosanitary regulations may also become more restrictive in the future. Climate change, increasing trade and more interconnected transport networks all risk an increase in the reach and rate of infectious disease transmission, possibly leading to a proliferation of new regulations,235 and resulting in more stringent cargo checks and longer turnaround times at key chokepoints. For example, in recent years zoonotic infectious diseases have created difficulties for port and customs authorities in locations as diverse as the US Gulf Coast ports, the southern ports of Brazil, southern Ukraine, the Turkish Straits, the Suez Canal, the Red Sea, the Arabian Sea and the Strait of Malacca.236
3.2 Hazard correlation
Chokepoint disruptions do not necessarily occur in isolation. Chokepoints that are situated in relative proximity to each other may be exposed to the same localized risks, meaning that their risk of closure is likely to be highly co-dependent. Where regional conflict or extreme climate conditions threaten local chokepoints simultaneously, the risks to food security are multiplied. For example, the greatest threat to food security among the GCC countries is some kind of regional conflagration that simultaneously disrupts two or three of the critical maritime chokepoints surrounding the Arabian peninsula, drastically limiting goods access to the region (see Box 8).
Box 8: Correlated security hazards to maritime chokepoints around the Arabian peninsula
The three key Middle Eastern maritime chokepoints of the Suez Canal, Strait of Hormuz and Strait of Bab al-Mandab face a number of security threats, some of which could coincide and have compounding effects.
The risk of an attack on the Suez Canal may be rising.237 Terrorist activity in the Sinai Peninsula has increased in recent years,238 and a number of terrorist attacks have been attempted239 that have prompted the introduction of more stringent security procedures.
Security risks to each of the Arabian chokepoints are likely to be correlated. The worst-case scenario is regional instability leading to two or three chokepoints being seriously disrupted for a sustained period
Iran’s periodic threats to close the Strait of Hormuz have long been a concern to oil markets. While the lifting of international sanctions against Iran will almost certainly tame these threats, political and security risks remain substantial. Relations between Saudi Arabia and Iran have deteriorated as the two countries wage proxy wars across the region. The stance of the new US administration towards Iran adds to the uncertainty. Regular reports of Iranian weapons being smuggled through the Strait of Hormuz240 further raise the stakes for controlling traffic through this key waterway.
The Strait of Bab al-Mandab remains exposed to spillover from conflict in Yemen, and to instability in nearby Somalia. However, as the recent Arab uprisings illustrate, instability in the region is contagious and conflicts are often not contained within one country. As a result, security risks to each of the individual Arabian chokepoints are likely to be correlated. The worst-case scenario is regional instability leading to two or three of the chokepoints being seriously disrupted for a sustained period.
Correlations can also occur over greater distances. For example, the imposition of export controls by a government seeking to bolster domestic food security would likely push up international prices and potentially encourage other governments to do the same. This was precisely what happened during the 2007–08 global food price crisis when over 40 governments imposed export controls at their borders as confidence collapsed and prices soared.
Teleconnection patterns within the meteorological system may also increase the risk of simultaneous weather-induced stoppages at chokepoints that are far apart. A recent taskforce on extreme weather and global food system resilience241 recognized that teleconnections may increase the risk of simultaneous weather-related crop failures in crop-growing regions, and noted that more research was needed on the implications of climate change for this phenomenon. Food system chokepoints could be similarly at risk. For example, a scenario in which extreme floods disrupted the Brazilian road system at the same time as a tropical storm caused severe damage to US Gulf Coast ports and rendered US waterways unnavigable could have significant implications for international markets (see Box 9).
Box 9: The possible impact of coincident chokepoint disruptions in major crop-producing regions
Recent history can be used to illustrate the potential severity of coincident weather-related disruptions to chokepoints in multiple breadbasket regions. In 2005, Hurricane Katrina struck the port of South Louisiana, destroying 70 per cent of channel markers along the lower Mississippi River and setting adrift more than 300 barges.242 Grain exports via the mouth of the Mississippi were halted for nearly two weeks, and traffic did not reach pre-hurricane levels again until eight weeks after Katrina’s landfall.243
When heavy rains hit southern Brazil during a bumper harvest in 2013, exports could not be loaded on to ships at port owing to the wet conditions. Significant backlogs rapidly built up: at their peak, delays involved over 200 vessels waiting outside Brazil’s main ports for an average of 39 days.244 The effects of the disruption were not only short-term: a total of US$2.5 billion was lost to long delays and cancelled orders,245 including a US$1.1 billion order from Sunrise Group, one of China’s largest soybean importers.246
Were two such events to coincide, up to 50 per cent of global soybean supply could be affected.247 And were they to coincide during the harvest and export season, either in Brazil or in the US, the potential supply shortages and price hikes could be particularly significant.
A more alarming scenario, in which chokepoint disruptions in Brazil and the US coincided with a Russian heatwave similar to that seen in the summer of 2010,248 is also conceivable. Recent experience indicates that the ramifications would be severe. Up to 51 per cent of global soybean supply, 41 per cent of global maize supply and 18 per cent of global wheat supply could be halted or delayed.249 (With the harvest seasons for US wheat and Russian and Brazilian spring wheat all falling in August and September,250 the capacity of international wheat markets to respond to significant availability concerns and price hikes would be limited.) The curtailment of global wheat supply would directly affect major wheat-importing countries, many of which are among the most fragile and least food-secure;251 the events of the Arab Spring demonstrated the politically incendiary potential of high bread prices resulting from a price shock.252
More broadly, a disruption of this scale would likely prompt price spikes across global food markets, with reactive trade restrictions amplifying the upward pressure on prices from a suddenly tightened supply–demand balance. The extreme price spikes of 2007–08 were primarily the result of ad hoc trade measures (fears of weather-induced supply shocks turned out to be exaggerated)253 and were driven by a drop in global rice exports of just 9 per cent254 – ominously, this is a far smaller supply decline than would be likely in the event of concurrent disruptions to major chokepoints.
3.3 Risk cascades
In an increasingly interconnected and complex world, dealing with high-impact, low-probability events and the ‘risk cascades’ that these can trigger has become a priority for governments and businesses. As already noted, the Arab Spring offers a cautionary tale of how a cascading chain of events in agricultural markets can interact with social and political grievances to set off a wave of uprisings, with profound and ongoing consequences for human and national security.
In an increasingly interconnected and complex world, dealing with high-impact, low-probability events and the ‘risk cascades’ that these can trigger has become a priority for governments and businesses
By their nature, strategic chokepoints could be epicentres for risk cascades. The chokepoints discussed in this report are integral not only to food trade but to a host of other economic sectors, not least energy. The Strait of Hormuz, Turkish Straits, Strait of Malacca, Suez Canal and Strait of Bab al-Mandab are all critical arteries for oil and gas.255 Similarly, the Gulf Coast ports of the US are a major logistics hub for oil as well as grains. A major suspension to trade at one or more of these chokepoints could plausibly trigger simultaneous shocks to energy and food markets. Strategies to build resilience to risk cascades and to high-impact, low-probability events should therefore take account of chokepoints.
3.4 Chokepoint risk profiles
Each of the 14 food system chokepoints has a unique risk profile that is a function not only of the likelihood and severity of a particular hazard, but also of that chokepoint’s resilience to disruption. A high degree of resilience and effective preparedness measures may limit the likelihood of closure should a hazard transpire. Equally, favourable geophysical conditions – for example, relatively wide shipping lanes – may lessen vulnerability to a hazard; high winds during a storm may pose a significant threat to vessels in the narrow channels of the Turkish Straits, but much less so to those transiting the Strait of Malacca.
Table 2 presents an approximate indication of the relative risk of closure or restricted passage for the 14 major food system chokepoints, based on the incidence of such disruptions between January 2002 and January 2017. Where three or more closures or periods of passage restrictions have been reported during this 15-year period, the risk to the affected chokepoint is deemed ‘high’; where one or two such incidents have been reported, the risk is deemed ‘medium’; and where no known closures or passage restrictions have occurred during this period, the risk is ‘low’. Further details of past interruptions can be found in Annex 2. This is clearly an imperfect assessment, as recent history may not reliably indicate future risk due to the changing nature of hazards. Nor does our assessment differentiate between the severity of disruptions. Nevertheless, it provides some useful insights.
Table 2: Relative disruption risk of food trade chokepoints
— Authors’ own analysis. Pink (high risk) = three or more known disruptions since 2002; amber (medium risk) = one or two known disruptions since 2002; aqua (low risk) = no known disruptions since 2002. For full details and sources, see Annex 2.
Table 2: Relative disruption risk of food trade chokepoints
Based on past events, the most at-risk chokepoints are the Black Sea and Brazilian ports, and the inland transport corridors of Brazil, the Black Sea and the US.
Of the 14 chokepoints, only the Strait of Gibraltar has been free from disruption over this period. The other 13 chokepoints have all suffered at least one disruption, although the frequency and severity of such events have varied considerably. For example, significant delays to port operations in the south of Brazil have arisen multiple times since 2002 in the wake of extreme weather events and, in 2013, lasted for over a month.256 By contrast, delays to transit through the Panama Canal in 2015, during a period of low water levels and thick fog, averaged just 12 hours.257
Of the 14 chokepoints, only the Strait of Gibraltar has been free from disruption between 2002 and 2017
Fifteen years of data are obviously insufficient to support conclusions about worst-case scenarios, for example at the threshold of one-in-50-year or one-in-100-year events, so it is not surprising that none of these chokepoint interruptions has had a major impact on food markets or food security. Small samples reveal little about the most damaging high-impact, low-probability events that occur in the statistical ‘tails’ of risk distributions. Nevertheless, what does emerge across the 14 systemic chokepoints is a picture of near-constant background disruption.
3.5 Conclusions
Chokepoint disruptions to date have been short-lived, and markets have responded in such a way as to limit reverberations through the international food system. But past experience is a poor predictor of plausible worst-case scenarios in a climate-changed world. The compounding effect of climate change on the hazards outlined above – not only relating to weather but also to insecurity and institutional risk – while not easy to quantify, increases the likelihood both of high-impact, low-probability events and of concurrent, smaller-scale disruptions to international supply chains.
Many of the hazards to which food trade chokepoints are exposed are likely to intensify
Many of the hazards to which food trade chokepoints are exposed are likely to intensify in the coming years. The extent to which these hazards will affect chokepoint operations – and thus food security – will depend greatly on the effectiveness of risk assessment and management at international, national and subnational levels. Actors at all levels will need to understand both the degree of their exposure and vulnerability to a major chokepoint dislocation, and the hazards that threaten strategic chokepoints along their supply chains.
In the next chapter, we lay out a framework for assessing chokepoint risk at national level. We also identify those countries with the highest levels of exposure and vulnerability to chokepoint disruption.
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197 Ibid.
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208 Ibid.
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237 Abrecht, T., Masala, C. and Tsetsos, T. (2015), ‘Maritime Security in the Mediterranean, Europe’s fragile underbelly’, in Krause, J. and Bruns, S. (eds) (2015), Handbook of Naval Strategy and Security, Routledge.
238 Council on Foreign Relations (2017), ‘Global Conflict Tracker’, updated 10 April 2017, http://www.cfr.org/global/global-conflict-tracker/p32137#! (accessed 11 Apr. 2017).
239 The Maritime Executive (2015), ‘Suez Canal Terrorist Attack Thwarted’, 6 July 2015, http://www.maritime-executive.com/article/suez-canal-terrorist-attack-thwarted (accessed 24 Feb. 2017).
240 Associated Press (2015), ‘Iran still trying to smuggle arms to Yemen, harass passing ships: 5th Fleet’, 9 November 2015, http://www.japantimes.co.jp/news/2015/11/09/world/iran-still-trying-smuggle-arms-yemen-harass-passing-ships-5th-fleet-commander/#.WLCkNn_V6ts (accessed 24 Feb. 2017).
241 Bailey et al. (2015), Extreme weather and resilience of the global food system.
242 Envision Freight (2011), ‘The Transportation of Grain’, Transportation Research Board of the National Academies, http://www.envisionfreight.com/value/pdf/Grain.pdf (accessed 11 Apr. 2017).
243 Ibid.
244 Azoulai, Dunlop and Kuettel (2013), ‘Big Bottleneck: A Weak Transportation Network Is Hurting Brazil’s Once-hot Economy’ (accessed 9 Mar. 2017).
245 Thompson, J. (2013), ‘Brazil Likely to Face Transport Challenges Again’, United Soybean Board, 7 April 2014, http://unitedsoybean.org/article/brazil-likely-to-face-transport-challenges-again (accessed 9 Mar. 2017).
246 Stillman, A. (2013), ‘Agriculture: Bumper crops fall victim to inadequate infrastructure’, Financial Times, 16 May 2013, http://www.ft.com/cms/s/0/c9f075ba-b7bf-11e2-9f1a-00144feabdc0.html#axzz3yRsBSmOi (accessed 24 Feb. 2017).
247 Authors’ estimate based on Chatham House Maritime Analysis Tool and Chatham House (2017), resourcetrade.earth.
248 Kramer (2010), ‘Russia, Crippled by Drought, Bans Grain Exports’ (accessed 11 Apr. 2017).
249 Authors’ estimate based on Chatham House Maritime Analysis Tool and Chatham House (2017), resourcetrade.earth.
250 AMIS (2012), AMIS Crop Calendar, http://www.amis-outlook.org/fileadmin/user_upload/amis/docs/resources/AMIS-online-crop-calendar_REDUCED3.pdf (accessed 11 Apr. 2017).
251 Brinkman, H.-J. and Hendrix, C. S. (2011), Food Insecurity and Violent Conflict: Causes, Consequences, and Addressing the Challenges, Occasional Paper No. 24, World Food Programme, https://www.wfp.org/content/occasional-paper-24-food-insecurity-and-violent-conflict-causes-consequences-and-addressing- (accessed 11 Apr. 2017); d’Amour, C. B., Wenz, L., Kalkuhl, M., Steckel, J. C. and Creutzig, F. (2016), ‘Teleconnected food supply shocks’, Environmental Research Letters 11(035007), doi: 10.1088/1748-9326/11/3/035007 (accessed 11 Apr. 2017).
252 USDA Economic Research Service (2015), Middle East and North Africa Region: An Important Driver of World Agricultural Trade, AES-88, https://www.ers.usda.gov/webdocs/publications/aes88/53335_aes88.pdf (accessed 11 Apr. 2017); Lagi, M., Bertrand, K. Z., and Bar-Yam, Y. (2011), ‘The Food Crises and Political Instability in North Africa and the Middle East’, SSRN, doi: 10.2139/ssrn.1910031 (accessed 11 Apr. 2017).
253 Childs, N. and Kiawu, J. (2009), Factors Behind the Rise in Global Rice Prices in 2008, USDA Economic Research Service, RCS-09D-01, https://www.ers.usda.gov/webdocs/publications/rcs09d01/13518_rcs09d01_1_.pdf?v=41056 (accessed 11 Apr. 2017).
254 Global rice exports in 2009 stood at 31.7 million tonnes, compared with 34.8 million tonnes in 2008 – Chatham House (2017), resourcetrade.earth (accessed 11 Apr. 2017).
255 Emmerson, C. and Stevens, P. (2012), Maritime Choke Points and the Global Energy System: Charting a Way Forward, Briefing Paper, London: Royal Institute of International Affairs, https://www.chathamhouse.org/publications/papers/view/181615 (accessed 27 Apr. 2017).
256 Azoulai, Dunlop and Kuettel (2013), ‘Big Bottleneck: A Weak Transportation Network Is Hurting Brazil’s Once-hot Economy’ (accessed 9 Mar. 2017).
257 Safety4Sea (2015), ‘Panama Canal continues to experience high vessel backlog’, 10 November 2015, http://www.safety4sea.com/panama-canal-continues-to-experience-high-vessel-backlog (accessed 2 Jun. 2017).