Chokepoints and Bottlenecks

In early 2024, the central strategic question is no longer whether global trade is interconnected, but where it is thin. The world economy still presents itself as a network, yet under stress it behaves more like a funnel: a handful of canals, straits, production clusters, and service systems decide the continuity of energy, shipping and industrial production. Therefore, the relevant map of risk is the narrow points where disruption compounds into leverage. The Red Sea attacks have already demonstrated that a chokepoint need not be closed to be effective. Harassment, uncertainty, and rerouting are enough to raise costs, delay deliveries, and import inflation into otherwise distant economies.

From the standpoint of Western economies in early 2024, there is a clear risk hierarchy. The Strait of Hormuz remains the most dangerous immediate trigger because energy shocks travel fastest. The Red Sea–Suez corridor is the next pressure point because Europe–Asia trade still depends heavily on it. Taiwan is a decisive industrial chokepoint because advanced semiconductor production remains extraordinarily concentrated there, but it is unclear that Taiwan is under immediate threat. The South China Sea and Strait of Malacca sit as the circulatory system of East Asian manufacturing and imported energy. And beneath all of them sits the hidden operating system of trade itself: insurance, ports, payment rails, and logistics coordination. What matters in crisis is not merely the existence of flows, but the absence of slack; even after covid, we are a ‘just in time’ world.

My baseline scenario is prolonged friction on the brink of crisis. In this world, the Red Sea is unsafe but not impassable; ships may continue rerouting around the Cape, if driven by secondary economic pressures like insurance; Panama must be watched for constraints—whether by droughts or geopolitical events; and Hormuz stays open, but the threat of closure looms as a form of mutually assured economic destruction. This is not catastrophic world to live in, but it is costly. The IMF reported in March 2024 that trade through the Suez Canal had fallen by 50% year on year in the first two months of 2024, while diversions around Africa added ten days or more to average delivery times. UNCTAD, at roughly the same moment, estimated that Suez transits were down 42% from peak levels, container ship transits had fallen by 67%, and Panama Canal traffic had also dropped sharply under climate stress. In this scenario, the result is a long drag: higher freight rates, more working-capital strain, irregular inventories, and renewed inflation pressures for trade-dependent and energy-import-dependent economies, especially if stresses happen before central bank interest rates return to recent historical norms.

The second scenario is regional energy escalation. Here, Gulf tensions intensify and markets begin pricing serious risk to Hormuz. This is where the trade story becomes a macro story. According to the U.S. Energy Information Administration, the Strait of Hormuz carried 20.7 million barrels per day in 2024, and recent EIA analysis places first-half 2025 flows at 20.9 million barrels per day — about one-fifth of global petroleum liquids consumption and roughly one-quarter of global maritime oil trade. The same source notes that Saudi and Emirati pipeline alternatives can bypass only part of that volume. In practical terms, Hormuz does not need to be shut to cause damage. Threats, seizures, missile strikes, or even credible fear can drive insurance costs and oil prices higher within hours. Of course, it is currently in nobody’s best interest to threaten Hormuz, but it is necessary to understand that Hormuz is Iran’s Deadman’s switch.

For policymakers in early 2024, this is the most dangerous escalation path because it compresses time. Shipping shocks unfold over weeks, but energy shocks reprice almost immediately. A Hormuz scare would hit fuel costs, skyrocketing oil prices, unanchoring inflation expectations, and constraining central-bank policy. Europe would feel it acutely because it remains highly exposed to imported energy and to the second-round effects of dearer shipping, especially where liquid natural gas may be threatened. The United States would be less physically dependent on Gulf imports than many Asian economies but not insulated from globally priced and politically exposed to consumer gas prices at the pump. This scenario is therefore not only about energy supply; it is about the threat of stagflation.

The third scenario is a Pacific industrial shock. This is the most severe medium-term scenario, even if it is not the most immediate. If a Taiwan crisis, blockade, or major coercive confrontation interrupts semiconductor output, the consequences would exceed those of a normal supply-chain disturbance. Taiwan is not merely another manufacturing hub. According to the U.S. Commerce Department’s Taiwan semiconductor guide, Taiwan accounts for over 60% of global foundry revenue and more than 90% of leading-edge chip manufacturing. Production elsewhere cannot simply be turned on in a crisis.

The economic effects here would arrive more slowly than an oil spike, but much cut deeper. Firms could draw down inventories for a brief time and may even be able to adapt in the longer-term (think 18-months or more). But, between 3- and 18-months, shortages would spread from electronics into autos, telecoms, industrial machinery, cloud infrastructure, AI systems, and defence supply chains. A Taiwan crisis would also raise risks across the South China Sea and the Strait of Malacca, through which East Asian manufacturing and imported energy continue to flow. If those waters became contested, the West would not merely lose finished goods from China; it would lose the broader web of components and intermediate inputs that sustain production across the region. That would be much worse.

The fourth scenario is cumulative systems failure amidst polycrisis: several medium-sized disruptions striking together. This is, in some ways, the most plausible strategic nightmare even if it is inherently the least probable on paper. It is easy to imagine a series of near-misses resulting in accumulated net-losses. One can imagine a world where the Red Sea is contested—whether by nation states or would-be trouble makers of another kind. Panama is intermittently climate-constrained. Hormuz risk premiums rise—either due to mounting tensions or as a permanently elevated insurance premiums after skirmishing. Freight costs stay elevated in the face of risk. Semiconductor supply becomes more politically exposed as demand and dependency grows for compute. Together such perturbations would erode the assumptions on current trade rests. UNCTAD’s February 2024 warning is important because it framed Red Sea, Black Sea, and Panama as simultaneous pressure on the world’s maritime lifelines. That is the right frame; overlapping strain across multiple narrow systems.

The policy implication is not that global trade is ending. How could it? Rather, the age of frictionless continuity is almost certainly over. States and firms should be planning for resilience in the face of uncertainty: more stockpiles, more route diversity, more trusted suppliers, more emergency coordination, and more realism about where dependencies exist and can be leveraged in games of geopolitical rivalry. The lesson of chokepoints is that efficiency and resilience are not the same thing. In peacetime, hyper-efficient trade systems look elegant. In crisis, they are instruments of coercion. The world economy is still a web, but under pressure it tightens into a funnel and bottlenecks decide everything.