Photo: Lindi Botha
While shipping prices are currently on a downward trajectory as congestion at ports eases, volatility is set to remain the norm as climate change starts to impact shipping routes and efficiencies. This is expected to increase export risk, which comes at a cost.
Five years of black swan events
Since 2020, exporters have faced significant challenges with shipping. An anonymous source in the shipping industry told Farmer’s Weekly that the COVID-19 pandemic led to the highest shipping rates in history, which caused immense congestion at ports. This led to fewer available cargo ships and soaring prices.
The outbreak of the Russia-Ukraine war in 2022, followed by that in the Middle East in 2023, which resulted in the temporary closure of the Suez Canal, caused further upheaval. Ships had to be rerouted around Africa, which resulted in longer transit times, further reducing the availability of cargo ships.
“This also coincided with the breakdown of Transnet’s port management, which meant many ships sailed past South Africa, impacting ship availability and therefore costs for South African exporters,” the source explained.
He noted that 2025 was, however, a turning point as the COVID-19 backlog had been cleared, Transnet’s performance improved, and ships started using the Suez Canal again in November.
“Transport through the [Suez] Canal will, however, take some time to recover, as shipping companies are still nervous due to safety concerns.”
The source added that shipping companies invariably took advantage of the geopolitical situations and raised shipping prices significantly. With this volatility now subsiding, prices have already fallen this year and are expected to decrease further next year.
Climate change to increase shipping disruptions
Nonetheless, exporters aren’t out of the woods. While the shipping industry had, to date, been more affected by geopolitics than natural disasters, the latter is likely to become an increasing threat.
Coenraad de Bruin, executive head of specialist lines at Hollard Insure, said climate change is actively redrawing the sea lanes that underpin global trade, creating real, near‑term implications for trade.
“The shift is no longer a distant scenario but is already influencing which routes are viable, how long voyages take, and how risk is priced across the supply chain,” he explained.
Shipping companies, insurers, and cargo owners need to rethink how they operate. De Bruin noted that traditional chokepoints such as the Panama Canal are becoming less reliable as prolonged droughts reduce water levels in the Gatun and Alajuela lakes.
“Because the [Panama] Canal’s lock system runs on fresh water, low levels force draft limits and fewer daily transits, triggering queues, auction-style slot pricing, and costly rerouting.
“During severe seasons, daily passages have dropped to the mid-20s, with some vessels diverting around Cape Horn [in Chile] or the Cape of Good Hope.”
While the Suez Canal is less sensitive to climate-driven water shortages, it absorbs much of the traffic displaced from Panama, amplifying congestion and operational strain.
At the same time, the Arctic is gradually opening due to global warming but remains far from a reliable alternative. De Bruin said that although the Northern Sea Route could cut 10 to 15 days from Europe–East Asia voyages, it comes with unpredictable multiyear ice, short seasonal windows, sparse ports, limited search-and-rescue coverage, and strict regulatory requirements.
Weather volatility has therefore become a fixed planning variable. The shipping industry can expect more shifts in mode and node in the future, such as Southern Africa rounding increases, West African bunkering stops, and Arctic opportunism in peak summer. This would make delivery times inherently volatile rather than temporarily disrupted.
Pricier shipping
De Bruin noted that more intense cyclones, shifting storm tracks, and altered wave conditions are causing more rerouting, port closures, and container losses, while rising sea levels are pushing ports to invest heavily in infrastructure. These costs flow directly into port dues and handling fees, increasing shipping costs.
Cargo owners are also facing a growing ‘delay gap’. De Bruin explained that standard marine cargo policies typically exclude pure delay, even though congestion-driven holdups are becoming routine.
To address this, insurers are developing parametric products triggered by verified delays, queue lengths, or weather indices, as well as non-damage business interruption extensions in stock throughput programmes.
He added that accumulation risk is another growing concern: “When sailings bunch up due to weather or canal bottlenecks, ports become more vulnerable to storms and flooding, prompting insurers to tighten aggregates and apply geofencing clauses.”
For cargo owners, these shifts mean sourcing patterns could change as certain corridors gain seasonal advantage. De Bruin said reliability and resilience are therefore becoming procurement variables in their own right, particularly for businesses that depend on predictable lead times.
He advised cargo owners to align International Commercial Terms with their true risk appetite, stress-test stock throughput limits where accumulations occur, and insist on carriers following robust route planning and weather-avoidance protocols.
