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Systems in depth

One section per system: its state at evidence close, its exposures and what the operational series will watch.

8 min read0 figures5 tables15 notesNR-STRATEGIC-SUPPLYCHAINS-GLOBAL-2026-BASELINE

Contents
  1. ·Edition home
  2. ·Executive summary
  3. 1Trade moves through a few narrow places
  4. 2Key findings
  5. 3Systems and sectors at baseline
  6. 4Risks and capability
  7. 5A chokepoint closure that overlaps a Red Sea diversion and high freight rates
  8. 6Readings from the other desks
  9. 7The 2027 agenda
  10. 8Systems in depth
    1. 8.1 Common causes
    2. 8.2 Domino effects
    3. 8.3 Inter-systemic feedbacks
    4. 8.4 Shared vulnerabilities
    5. 8.5 Thresholds and tipping
  11. AMethodology
  12. BData appendix
  13. CReferences and record
  14. ·Complete edition, for print

8.1Common causes

One cause can strike many routes at once: a war, attacks on vessels, low water levels or a licence rule. The shared cause matters more than the route.

≈130 to 6vessels a day

Hormuz transits, February to March 20265

5.9%

ton-mile growth in 2024 from rerouting1

72%

of merchandise trade on MFN terms15

Table 8.1Evidence at baseline
InstanceMechanism in actionEvidenceStatus
ConflictHormuz transits fell by about 95 percent in March 20265Reported
Attacks on shippingRed Sea rerouting lifted ton-miles in 20241Reported
Water levelsPanama Canal transit restrictions until mid-202414Reported
Trade controlslicences on seven rare earth elements remain in force22Reported

Pathways in this mechanism

  • CON → TRD conflict
  • INF → TRD attacks on vessels
  • MIN → TRD controls

Evidence to bind in 2027

  • common cause tagging of disruptions
  • frequency of concurrent causes

Related editions

  • GLB Global Systems
  • SR-02 Critical Infrastructure and Lifeline Systems
  • SR-04 Critical Minerals and Strategic Materials
  • SR-10 Digital Public Infrastructure and Systemic Cyber Risk
  • GS-02 Energy
  • GS-09 Infrastructure, Transport and Logistics

8.2Domino effects

A failure on one route removes an input from the next. A closed strait raises fuel and freight costs, then fertiliser costs, then food costs.

9.4million b/d

Middle East crude oil shut-ins, March to June 2026 average46

6.7million b/d

shut-ins in August 202646

≈16million tonnes

seaborne fertiliser normally through Hormuz6

Table 8.2Evidence at baseline
InstanceMechanism in actionEvidenceStatus
Strait to energycrude oil shut-ins averaged about 37 percent of February production from March to June 202646Reported
Energy to fertiliserurea prices rose 52 percent in the US and 60 percent in Brazil by mid-April 202617Reported
Fertiliser to foodapplications cannot be rescheduled without yield loss17Reported
Freight to budgetsSuez revenue projected to halve in FY2024/2518Reported

Pathways in this mechanism

  • ENE → FOO
  • TRD → FIN
  • FIN → DEV

Evidence to bind in 2027

  • sequence timing of price effects
  • importer stock levels

Related editions

  • GLB Global Systems
  • SR-02 Critical Infrastructure and Lifeline Systems
  • SR-04 Critical Minerals and Strategic Materials
  • SR-10 Digital Public Infrastructure and Systemic Cyber Risk
  • GS-02 Energy
  • GS-09 Infrastructure, Transport and Logistics

8.3Inter-systemic feedbacks

Trade also depends on what it carries. Rerouting absorbs ship capacity and lifts rates, and energy prices feed back into trade growth.

4.6%

merchandise volume growth, 202513

11%

added to container TEU-mile demand by Cape routing1

1.4%

March high-energy-price case, 202613

Table 8.3Evidence at baseline
InstanceMechanism in actionEvidenceStatus
Rerouting to capacitylonger voyages absorb ship capacity and lift distance-adjusted demand1Reported
Unwinding to demanda return to shorter routes would ease costs but cut ton-mile demand1Reported
Oil shut-ins to pricesBrent crude averaged USD 91 a barrel in August 2026 as Middle East exports stayed constrained46Reported
Energy prices to tradesustained high energy prices cut 2026 growth to 1.4 percent in the March case13Reported

Pathways in this mechanism

  • TRD ↔ INF
  • AIC → TRD
  • ENE → TRD

Evidence to bind in 2027

  • capacity response to a return of Suez traffic
  • depth of AI-goods concentration

Related editions

  • GLB Global Systems
  • SR-02 Critical Infrastructure and Lifeline Systems
  • SR-04 Critical Minerals and Strategic Materials
  • SR-10 Digital Public Infrastructure and Systemic Cyber Risk
  • GS-02 Energy
  • GS-09 Infrastructure, Transport and Logistics

8.4Shared vulnerabilities

Different goods share the same weak points: a few straits and canals, concentrated processing and a small set of export origins.

22.5million b/d

oil through the Strait of Malacca, 20247

≈85%

top-country share of rare earth refining, 202523

88%

cobalt seaborne trade from the top five exporters, 20231

Table 8.4Evidence at baseline
InstanceMechanism in actionEvidenceStatus
Straits and canalsMalacca 22.5 and Hormuz 20.7 million barrels a day of oil in 20247Reported
Mineral processingone country held about 85 percent of rare earth refining in 202523Reported
Export originsthe Democratic Republic of the Congo supplied over 80 percent of cobalt exports1Reported
Chip manufacturinglocation of leading-edge capacity; figures not reconciled28Expert input

Pathways in this mechanism

  • INF → TRD straits
  • MIN → AIC processing
  • MIN → TRD controls

Evidence to bind in 2027

  • share of trade through two or more chokepoints
  • processing capacity outside the top refiner

Related editions

  • GLB Global Systems
  • SR-02 Critical Infrastructure and Lifeline Systems
  • SR-04 Critical Minerals and Strategic Materials
  • SR-10 Digital Public Infrastructure and Systemic Cyber Risk
  • GS-02 Energy
  • GS-09 Infrastructure, Transport and Logistics

8.5Thresholds and tipping

A system can absorb stress until a threshold is crossed. Transit capacity, stocks and licence expiry dates are such thresholds for trade.

1.4%

2026 trade growth in the March high-energy-price case13

10November 2026

end of the rare earth control suspension22

≈800ships

Lloyd’s List estimate of vessels stuck in the Gulf, April 202620

Table 8.5Evidence at baseline
InstanceMechanism in actionEvidenceStatus
Canal capacityPanama recovered to 13,404 transits in FY2025 after the drought year10Reported
Energy price thresholdthe March case cut 2026 growth by 0.5 points to 1.4 percent13Reported
Licence expirysuspension runs to 10 November 202622Reported
Vessels strandedan estimated 800 ships in the Gulf in April20Reported

Pathways in this mechanism

  • INF → TRD capacity
  • ENE → FIN prices
  • MIN → TRD expiry

Evidence to bind in 2027

  • recovery times after a closure
  • stock thresholds for fertiliser and fuel

Related editions

  • GLB Global Systems
  • SR-02 Critical Infrastructure and Lifeline Systems
  • SR-04 Critical Minerals and Strategic Materials
  • SR-10 Digital Public Infrastructure and Systemic Cyber Risk
  • GS-02 Energy
  • GS-09 Infrastructure, Transport and Logistics

Notes

Numbers are the edition’s reference numbers, so a note reads the same in every chapter. The full list, with every source and its licence, is in Annex C. Annex C, references

  1. 5UNCTAD (ed.), Hormuz disruption deepens global economic strain across trade, prices and finance (second rapid assessment; transits about 130 a day in February and 6 in March 2026; merchandise trade growth 1.5 to 2.5 percent projected for 2026). United Nations Trade and Development, Geneva. Observation year 2026. Accessed 2026-11-03.back
  2. 1UNCTAD (ed.), Review of Maritime Transport 2025, chapter I: International maritime trade (12,720 million tons and 66,781 billion ton-miles in 2024; Cape detour about 30 percent; cobalt and copper concentration). United Nations Trade and Development, Geneva. Observation year 2024. Accessed 2026-11-03.back
  3. 15WTO (ed.), World Trade Report 2026: A critical juncture for the world trading system (about 72 percent of merchandise trade on MFN terms). World Trade Organization, Geneva. Observation year 2025. Accessed 2026-11-03.back
  4. 4UNCTAD (ed.), Review of Maritime Transport 2024, chapter II: World shipping fleet and services (Suez Canal about 10 percent of maritime trade volume and 22 percent of container trade; Panama Canal about 3 percent). United Nations Trade and Development, Geneva. Observation year 2024. Accessed 2026-11-03.back
  5. 22China Briefing (ed.), How will China’s rare earth export controls impact industries and businesses? (April 2025 controls on seven elements; 9 October 2025 expansion to five more; suspended until 10 November 2026). Dezan Shira and Associates, Hong Kong. Observation year 2025. Accessed 2026-11-03.back
  6. 46EIA (ed.), Short-Term Energy Outlook, September 2026, global oil markets (Brent averaged USD 91 a barrel in August 2026; Middle East crude oil production shut-ins from the Hormuz closure averaged 9.4 million barrels a day from March to June 2026 against February production of 25.2, and were 5.0 in July and 6.7 in August). US Energy Information Administration, Washington. Observation year 2026. Accessed 2026-11-03.back
  7. 6UNCTAD (ed.), initial assessment of the Strait of Hormuz disruption of 10 March 2026 (about one third of global seaborne fertiliser trade, about 16 million tonnes), as reported by a Pakistani daily newspaper; the UNCTAD text itself was not opened. Observation year 2026. Accessed 2026-11-03.back
  8. 17FAO (ed.), Strait of Hormuz crisis: FAO Director-General outlines risks, actions and policy responses (remarks to the 180th Council session, 28 April 2026; urea up 52 percent in the United States and 60 percent in Brazil by mid-April). Food and Agriculture Organization of the United Nations, Rome. Observation year 2026. Accessed 2026-11-03.back
  9. 18IMF (ed.), fourth review of Egypt’s arrangement (Suez Canal revenue USD 6.6 billion in FY2023/24 and projected USD 3.6 billion in FY2024/25), as reported by Hellenic Shipping News from Arab Finance; the IMF report itself was not opened. Observation year 2025. Accessed 2026-11-03.back
  10. 13WTO (ed.), Global Trade Outlook and Statistics, news release of 19 March 2026 (2025 merchandise volume growth 4.6 percent; 2026 baseline 1.9 percent; high-energy-price case 1.4 percent; Hormuz traffic from 138 vessels a day to almost zero). World Trade Organization, Geneva. Observation year 2025. Accessed 2026-11-03.back
  11. 7EIA (ed.), World Oil Transit Chokepoints (last updated 3 March 2026; 2024 total oil flows: Hormuz 20.7, Malacca 22.5, Suez and SUMED 4.8, Bab el-Mandeb 4.1, Cape of Good Hope 9.3 million barrels a day). US Energy Information Administration, Washington. Observation year 2024. Accessed 2026-11-03.back
  12. 23Investment Monitor (ed.), China rare earth curbs put USD 6.5 trillion of output at risk, article of 16 July 2026 reporting the IEA Global Critical Minerals Outlook 2026 (about 85 percent top-country rare earth refining share in 2025; investment down 9 percent in 2025); the IEA report itself was not opened. Observation year 2025. Accessed 2026-11-03.back
  13. 28UNVERIFIED, not opened: Semiconductor Industry Association and Boston Consulting Group, Strengthening the Global Semiconductor Supply Chain in an Uncertain Era, 2021, taken from search-result summaries that disagree on the Taiwan share; no figure is used in findings. Observation year 2021. Accessed 2026-11-03.back
  14. 20News report, Facts about the Strait of Hormuz since its negotiated reopening (last updated 8 April 2026; Kpler: average of eight commodity carriers a day from 1 March to 7 April; Lloyd’s List estimate of about 800 ships stuck in the Gulf; two-week ceasefire). Arab News Pakistan, Islamabad. Observation year 2026. Accessed 2026-11-03.back
  15. 10Panama Canal Authority (ed.), Panama Canal maintains operational and financial strength (press release of 8 October 2025; fiscal year 2025: 13,404 transits and 489.1 million CP/SUAB tons; preliminary and unaudited). Autoridad del Canal de Panama, Panama City. Observation year 2025. Accessed 2026-11-03.back

Cite this chapter

Valadbaygi, S. (Ed.). (2026). Chapter 8: Systems in depth. In Strategic Systems Report 2026: Global Supply Chains, Trade and Chokepoints (Baseline Edition 2026, Report No. NR-STRATEGIC-SUPPLYCHAINS-GLOBAL-2026-BASELINE) [Draft under review]. The Global Centre for Risk and Innovation (GCRI).

Every citation form of the whole report, BibTeX and RIS included, is on the edition home. Cite this report

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