Maritime chokepoints
Narrow passages through which a major share of world trade flows, Hormuz, Bab el-Mandeb, Suez, Malacca, Panama, whose closure or threat concentrates war and delay risk for marine insurers.
A large share of world seaborne trade passes through a handful of straits and canals. Through the Strait of Hormuz flows about a fifth of global oil consumption; through Bab el-Mandeb and the Suez Canal, a large share of trade between Asia and Europe; through the Strait of Malacca, most of East Asia's energy imports; through the Panama Canal, a significant share of flows between Asia and the US East Coast. Each carries its own risk: military tensions in the Gulf, attacks on ships in the Red Sea since late 2023, piracy, drought that cut transits through Panama in 2023, a grounding like the one that blocked Suez in 2021. For marine insurance, these passages are where risk concentrates. The London market's war risks committee lists areas there, where the shipowner must declare each transit and pay an additional premium, sometimes a significant percentage of the vessel's value. Rerouting, via the Cape of Good Hope, lengthens voyages by days or weeks, which affects charters, cargo insurance and loss of hire. Geography thus turns a local crisis into a global event, and a political risk into a transport risk.
Hypothetical case: a container shipowner must choose between transiting Bab el-Mandeb, a listed area, for an additional war premium of 0.7 percent of the vessel's value, or 700,000 dollars for a 100 million dollar ship, or going around Africa, with ten extra days at sea and the fuel that goes with them.
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