The Role of Trade Route Disputes in Supply Chain Instability

Today, with Globalisation at its peak, the economy is increasingly connected. One notable way is through the development of trade routes over time. Historically speaking, trade routes began in ancient times already with the establishment of The Silk Road, but now, modern trade routes encompass global shipping lanes, air cargo routes, and digital pathways for e-commerce. From the earliest trade routes, instability and conflict have been constant challenges. Let’s review how this translates in today’s modern trade setting.
No matter how you look at it, we still rely heavily on trade routes for the provision of many products. Any dispute or disruption within any of these routes, whether physical, political or digital, will directly impact one critical function within every modern business: The supply chain. A destabilised supply chain can be devastating to any business. Knowledge of possible disputes and disruptions and preparedness are a critical part of any supply chain manager’s role. Here are some examples of how trade route conflicts can disrupt supply:
- Critical pathways can be blocked: When there are trade route disputes, key chokepoints are often involved. A chokepoint in trade is a narrow passage along a waterway that is critical for the movement of vessels and their goods. If these get blocked, the area’s trade can grind to a halt. Trade route disputes often involve key chokepoints like the Suez Canal, the Panama Canal or the Strait of Hormuz.
- Increased costs: Disputes or conflict might require rerouting ships or vehicles to avoid contested areas. This means more fuel, time and other resource expenditure resulting in increased costs and delays.
- Delays in delivery: Even minor disruptions in trade routes can result in significant delays. This is especially disruptive to supply chains that rely on precise scheduling.
- Global Supply Chain networks can be blocked: Trade happens on a global scale meaning global supply chains are all interconnected. As a result, disruptions in one region can have knock-on effects across others.
- Increased geopolitical risks: We are not strangers to war over territory and resources. Trade route disputes often stem from geopolitical tensions, such as territorial disputes or trade wars.
- Price volatility: Disruptions in trade routes, especially those involving resources like natural gas, oil, or rare materials, can lead to price increases.

Here are some real-world examples and additional reading to update your knowledge:
The Suez Canal Blockage (2021)
Recently, the Suez Canal, a prominent trade route, was blocked by the Ever Given, a container ship that got stuck for six days halting trade in the area completely. According to Forbes, “in 2022 alone, almost 23,900 ships transported around 1.4 billion tons of freight through the 193-kilometre-long Suez Canal”. This forced trade to reroute around the south of Africa, resulting in longer transportation time and significant costs and delays.
Additional reading: Suez Canal Crisis: Lessons Learned And How Tech Can Help
Russia-Ukraine War (2022–Ongoing)
The ongoing conflict between Russia and Ukraine continues to significantly disrupt global supply chains, particularly in the energy sector. A recent development involves the expiration of a gas transit deal between the two nations, which has raised concerns about the energy supplies that are exported to Europe. Ukraine has announced it will not renew the deal, potentially affecting countries that rely on Russian gas transported through Ukrainian pipelines. This situation underscores the volatility of energy supply chains amid geopolitical tensions.
Additional Reading: https://www.reuters.com/business/energy/russian-gas-sales-europe-are-complicated-kremlin-says-after-putin-fico-talks-2024-12-23/
China-Taiwan Tensions (2023–Ongoing)
The Taiwan Strait, a key route for global trade, remains a contentious area due to escalating tensions between Taiwan and China. With China conducting military exercises and the U.S. increasing its naval presence, any disruption could impact the movement of essential goods like semiconductors, given Taiwan’s dominance in this industry.
Additional Reading: CSIS on U.S.-China-Taiwan Trade Relations
U.S.-China Trade Wars and the Indo-Pacific Region (2023–2025)
The trade war between China and the U.S. has now extended to the Indo-Pacific, with countries like Vietnam and India becoming alternative hubs for manufacturing. For supply chains that were previously reliant on China’s dominance, these shifts have significant implications.
Additional Reading: Brookings Institution: Economic Shifts in the Indo-Pacific
Russia’s Northern Sea Route and Sanctions (2024–Ongoing)
The increase in international sanctions and rising geopolitical tensions has impacted Russia’s push to develop the Northern Sea Route as an Arctic trade corridor. However, climate change, and melting ice, are furthermore increasing accessibility, sparking debates about sustainability and geopolitical risks.
Additional Reading: World Economic Forum: The Future of Arctic Trade Routes
The Belt and Road Initiative (BRI) and African Trade Routes (2023–2025)
China’s BRI investments have sped up infrastructure across Africa, increasing its connection to global markets. However, disputes over influence and debt have raised concerns about the long-term sustainability of these trade routes.
Additional Reading: Chatham House: China’s Belt and Road in Africa
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Conclusion
These examples show us that trade route disputes are not a relic of the past and will continue to present themselves in the days, weeks, months and years to come. This highlights the importance of building a resilient supply chain amidst the uncertainty that all supply chains are subject to. The only way to mitigate these risks is by prioritising route diversification and risk management which is increasingly developing through technology. The future of trade belongs to those who adapt and innovate amidst uncertainty.