Canal-ysis: the world’s waterways in focus for 2025

The beginning of 2025 finds Israel now in a direct fight with the Houthis, exchanging aerial bombardments, missiles and drone strikes with the Iran proxy group that has been menacing shipping and denying access to the Suez Canal for most traffic since late 2023.

Now, Israel has pitched a full-scale ground invasion of Yemen to the UN Security Council, in the hope of destroying the Houthis once and for all – something tried and failed by Saudi Arabia in the 2010s.

But head of Vespucci Maritime and respected shipping analyst Lars Jensen, whose daily LinkedIn posts have been critical to observers’ understanding of the Red Sea conflict, told The Loadstar this week that even if the Houthi attacks were to end – whether through an emergence of peace in the Middle East, or because they are all dead – shipping lines will likely not resume their Red Sea transits until at least August. This is thanks to the complexities of changing schedules, and the financial risk posed to their shipper customers by a casualty and General Average declaration.

Meanwhile, despite suffering a 60% shortfall in revenues from the Suez Canal, equivalent to around $7bn, Egypt has just completed a new 10km channel which will enable vessels plying the Canal to pass one another more effectively.

“This expansion will boost the Canal’s capacity by an additional six to eight ships daily and enhance its ability to handle potential emergencies,” the Suez Canal Authority said in a statement last week.

Though it would be very bad luck to see another this year, such ‘emergencies’ have more potential vectors than just the geopolitical. In contrast to Panama, which was constrained by low water levels throughout 2023 and some of 2024, Suez’s main concern in terms of the climate is dust storms, according to a 2022 report. Already having played a considerable role in the Ever Given incident of 2021, projections indicate that, “with increased desertification and drought, an increase in the intensity and frequency of sandstorms and dust storms is likely” as soils weaken across Egypt.

Over the holidays, Donald Trump, in a post on his platform Truth Social, decried the Panama Canal as being bought and sold by China. “Merry Christmas… to the wonderful soldiers of China, who are lovingly, but illegally, operating the Panama Canal,” he wrote. Unable to resist a dig at ex-Democrat president Jimmy Carter, he said that the Canal had been “foolishly [given] away, for one dollar, during his term in office.”

The late ex-President, who died in the last days of 2024, remains one of Trump’s well-documented beefs. Back in 2021, he dubbed Biden “the new Jimmy Carter” although tempered the comparison, adding that Biden had “created” successive crises whereas Carter had merely “mismanaged” them.

“If shipping rates are not lowered, we will demand that the Panama Canal be returned to us, in full, quickly and without question,” Trump wrote.

Deglobalisation-happy, and a folkloric dealmaker extraordinaire, his criticism of Carter’s Canal Neutrality Treaty, ratified in 1977, is in keeping with his aversion to Democrat-made agreements in general, including his 2018 abandonment of the Obama-helmed nuclear treaty with Iran. Paraphrasing Carter’s agreement, Trump wrote that the Canal was “solely for Panama to manage, not China, or anyone else.”

Thus trolled, an exasperated José Raúl Mulino, president of Panama, dismissed Trump’s “nonsense” claims of Chinese soldiers patrolling the Canal “for the love of God”. “There are no Chinese… nor any other world power… at the Canal,” he said.

Now, though, it is likely the Panamanian government will have to address the hair of truth at the centre of Trump’s customary Gordian Knot of horseshit: namely, Panama has benefitted from several billion dollars of Chinese Belt-and-Road investment. Hong Kong-based Hutchison is in charge of ports on either side of the Isthmus, at Balboa and Cristobal; and Chinese contractors are taking part in Canal infrastructure projects.

This by itself need not indicate anything sinister. But the White House has been keeping an eye on Panama since well before the election, as evidenced by US ambassador to Panama, Mari Carmen Aponte’s remarks in early 2023 that, “we [the US] do not want to put Panama in a situation where they have to choose between the United States and the People’s Republic of China”.

The US is not alone in its wariness of such a level of Chinese control; the German Government stepped in to argue down COSCO’s stake in a Hamburg terminal throughout 2023. However, as China’s biggest trading partner – although taken together, EU countries make up slightly more – smooth going of cargoes through the Canal seems undeniably in the interest of both the US and China. There is also a considerable trade deficit between the two countries (the US imported almost three times as much from China, by value, as it exported in 2023).

While the Federal Government will almost certainly pull Trump back from an invasion of Panama, then, the fine-print of Chinese investments there, particularly those associated with Belt-and-Road, will be scrutinised closely – even if Trump himself will probably not be reading it.