There prevail challenges to maritime trade along SLOC, for example
piracy and maritime terrorism. These can negatively impact global economic stability.
Piracy in the Gulf of Aden Piracy in the
Gulf of Aden had a negative economic impact, because it directly affected shipping along one of the most important SLOC connecting Europe to Asia through the
Suez Canal. Piracy attacks reduced bilateral trade value between two countries. As a consequence, the cost of
Somali piracy activity between the years 2000 and 2016 is estimated to lie between $1 billion to $25 billion annually. The direct cost of rerouting due to Somali piracy in the
Gulf of Aden amounted to $12 billion in 2010. Around 12-15 percent of global trade and 30 percent of global container trade pass through the
Suez Canal and through the Red Sea annually. Firstly,
Houthi activity in the
Red Sea increased operational costs of shipping companies by 18 percent. Longer routes also required higher expenses due to higher wages, more maintenance and repairs. Thirdly, the
Red Sea Crisis caused disruptions in the
financial sector. Increased operational costs of shipping companies reduced dividends and served as a negative signal to investors. Because of this, investors exited the stock market which made stock prices more volatile and disrupted overall financial market stability. ==See also==