Climate change putting shipping lanes at risks: Report

Disruption from Climate change-related perils put several shipping lanes including the Suez and Panama Canals at risk, reveals a new report from global broker Marsh and climate risk analysis firm Cross Dependency Initiative (XDI) finds.

As per the report, an increase in coastal inundation – where the sea level rises high enough to flood infrastructure – and extreme heat are among the effects of climate change likely to have a significant impact on waterways that are vital for global trade.

The report, taking Suez Canal as a case study has modeled risks at four ports and along the canal waterway in 2020, 2050, and 2100, based on a global average temperature increase of 3.7°C above pre-industrial levels.

The Suez Canal Container Port with the highest exposure to physical climate-related risks is likely to see these double between 2020 and 2100, driven largely by coastal inundation. With risks to infrastructure and port operations, including the loading of cargo, the other three ports will also be affected to varying degrees.

The report, which models extreme wind and heat events, predicts that over the century extreme wind events would increase marginally and the extreme heat events reaching 45°C will likely double by 2050 and increase seven-fold by 2100.

These extreme temperatures will result in a changed sea salinity and density, which in turn influences engine cooling on ships, while dryer soil can make sandstorms more likely, with the potential to affect visibility.

As per the report, Egypt’s coastal shoreline and the Nile Delta are particularly at risk from rising sea levels, while the country is also likely to see an increase in desertification and drought, as well as in the intensity and frequency of sandstorms and dust storms.

Nick Faull, head of climate and sustainability risk at Marsh, says: “While reaching a 1.5° Celsius Paris-aligned climate scenario will reduce the impact of the physical climate risks on these routes, greater resilience to these threats should be embedded into future infrastructure planning to limit critical dependencies and preserve critical supply chains in the long term.”

Nick Faull, head of climate and sustainability risk at Marsh

“We are in the situation now where the further escalation of extreme weather from climate change is locked in, so understanding the risks that pose to existing and future infrastructure is critical to economic and social stability,”

Rohan Hamden, CEO of XDI

With worsening climate change effects, some significant changes in the Suez Canal’s infrastructure could be required to enable its resilience, the report says.

With worsening climate change, maritime transports will see the following effects:

Re-routing becomes more common: the rising sea levels, worsening coastal erosions, and changing sedimentation patterns will make the existing routes unsafe or difficult. So, new courses will need to be planned. Routing changes regularly will not only cause inconvenience to shipping lines but also to customers as transit time will increase. It will deter productivity and increase costs as companies will be required to put financial resources into planning routes.

Infrastructure: Rising sea levels will harm the port infrastructure, by either submerging or destroying the infra. While the stress of infra destruction can not be eliminated changes in building and structural development practices are needed to be developed. To mitigate the risks, it is required to raise or harden the banks or widen the canal.

Decrease demand: The increasing climate change is also tampering with the produce, resulting in fewer goods needing to be transported. Therefore, less demand for shipping lines. This could drop the profits generated by ports.

As per report, the capital for measures could be provided by government (co-) sponsorship, direct-to-market bonds, or pension funds.

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