Cargo shipping: Chokepoints, trade routes – and a sign of excessive globalization? Business Beyond | JPNN us

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a very big ship getting stuck in a very small waterway running up huge costs made ripples still being felt all around the world but what has the ever given incident taught us about the maritime sector this is about ships and where they’re heading literally and figuratively how will they look like where are they going how will they change but first let’s start with the basics shipping is basically the string that holds modern capitalism together but it does so mostly out of sight at least for most of us for those of us who study shipping there’s often a phrase that’s used that the the maritime sector is the forgotten space of global capitalism we are the invisible industry there is also the the invisible connector uh between producers and consumers of every single part of what we what we make use of in our everyday lives the origin may not be completely certain i cannot i cannot put it for western churchill but it’s something like without global shipping half of the world would staff and the other half would freeze sidebar i can’t find out who said it first either just that it’s said a lot because 90 of all traded goods are transported over the water it’s still the cheapest way to bring stuff from point a to b wherever it is in the world if you buy a pair of sneakers maybe it’s the shoelaces the cost of that that is what the transport from the far east to to europe to the us that is what it’s cost now shipping became more affordable because of one important but somewhat prosaic development the invention of the shipping container before that it was a challenge to get goods of various shapes sizes and weights onto a ship it required a lot of manpower but the emergence of containers meant you had steel boxes that could be stacked and transported easily it eventually gave rise to what would become a widely used standard of measurement in the industry the 20-foot equivalent or the teu these days standardized containers come in two sizes 20 feet or 40 feet and ships have gotten steadily bigger through the decades in order to accommodate more containers with the biggest coming in at almost 24 000 teu because bigger ships mean more containers which in turn mean fewer trips and lower fuel costs shippers mostly the ship owners and operators want to reduce the unit cost of of the transported goods and that’s why the more you where you can you can carry and the more you can offer your clients to to bring on board your ship the lower the price of the unit of course now you might have even thought of big ships and what they mean to the world lately given that one in particular recently got itself stuck in one of the world’s most important waterways since the incident is probably so fresh in your mind you’ll only need a quick recap the ever given mega ship turned sideways and got stuck in the suez canal for six days in march 2021 choking off the narrow but super important waterway through which 12 of all world trade passes leaving more than 300 vessels unable to proceed through the canal causing major delays in trade and various supply chain issues even after the ever givens much celebrated dislodging the consequences are still unfolding and the costs are still being tallied so we estimated the cost of this one week disruption to between 30 and 50 billion in dollars that is so important that even a weak delay has a cost either through longer delivery times or through uh you know some shortages in some you know components that were already in a vulnerable spot so it really revealed that we are very tiny little things in the world of global trade and that one you know ship that is a bit across you know could actually block something that looks like a very well-oiled machine yeah the incident inspired headlines like this one pointing out that there are definite downsides to constantly upsizing every time you increase ship sizes ports have to make adaptations so ports have to raise their cranes they have to dig deeper channels they have to dredge they have to reclaim more land in order to make it more possible to receive larger and larger ships and this becomes essentially an arms race in shipping that becomes really unsustainable if you think about the massive environmental cost that it takes to blow up islands or to dredge or to you know mine uh tons of sand you know which is the the world’s largest mined commodity in order to make it possible to adjust to these ships bigger ships bigger ports linking more manufacturing and consumption because volume is harder to achieve with land transport it was approximately 20 000 containers onboard that ship and the ship has a crew of maybe 20-25 people so if you would have that done a land transport of that instead maybe one container on each lorry or maybe two i don’t know and then you have a driver in each lorry so i mean it’s a completely different story i don’t think that we as a society want all these lorries trading from the far east to europe either so as consumption grows and trade volumes increase does that mean ships are going to get bigger indefinitely it seems as if uh container ships right now have also found somewhat of a of a maximum at least if we go also by that record amount of orders that we saw only last month uh where 45 ultra large ships were were ordered and most of those were basically in in the size of 15 thousand and and not uh twenty uh three and twenty four thousand uh that was uh that was the preferred size for for uh investors and owners placing orders uh by the end of last year so uh so maybe uh this is it in terms of sizes while there may be an upper limit to upsizing beyond which becoming bigger stops making sense from an economic perspective the boats themselves are just one part of the story now there are the boats and there’s the water maritime trade relies on a number of narrow choke points connecting ocean systems and continents each with varying degrees of exposure to structural or geopolitical risks decades before the sweze canal was blocked for six days in 2021 there was the six-day war between israel and its arab neighbors in 1967.

In its aftermath egypt closed the canal for eight straight years the strait of hormuz some 21 million barrels of oil pass here a day it’s a stage for existing and potential tensions between iran and the west like the time in 2019 when iran seized a british tanker the stena impero for more than two months the strait of malacca connects china india and southeast asia it’s barely three kilometers across at its narrowest point that makes it a natural bottleneck for oil spills groundings or collisions here’s a photo from when a liberian oil tanker burst into flames after colliding with a british carrier in 2009 but let’s head back to the present the gem in the sweze canal and the possibility of future jams reopen discussions around alternative routes between east and west let’s go back to the map the suez canal route takes about 22 days from yokohama port in japan to the port of rotterdam in the netherlands a journey spanning 20 000 kilometers but some are looking towards the northern sea route hoping melting ice will make the route more passable for more weeks in the year and not just in the warmer months the trip by the arctic ocean takes about 10 days over a 9 000 kilometer distance [Music] especially russia has been keen to highlight the advantages of having this route play a bigger role and china is also eyeing the arctic with interest in terms of finding an alternative path to the european market but there are obvious issues a key one being that it’s an ecologically delicate region the prospect of oil spills and air pollution would impact the area’s environment there is i think quite a perverse discourse of hoping that climate change will accelerate global warming which would then open the sea route for more months of the year and i think those kinds of bets on the future in which one hopes that our you know planet reaches irreversible global warming in order to make a sea route viable are are quite um quite interesting and i think something that we really need to critique but talking about the increased adoption or rejection of the northern sea route because of climate change doesn’t make sense without talking about climate change itself if ocean shipping were a country it would be the sixth largest carbon emitter getting carbon emissions under control is key to the industry’s future on the road to decarbonized station the first say hurdles to cross is of course improve the energy efficiency it’s it’s uh adhering to the imo 20 30 targets for greenhouse gas emissions and and the big flag pole is of course cutting absolute emissions in the shipping industry by 50 by 2050 so that’s a tall task and a lot a lot needs to to be researched and developed before we can do that and a lot is happening the energy observer is the first self-sufficient energy vessel with zero greenhouse gas or particle emissions it’s powered by hydrogen and renewable energy companies like finland’s norse power are trying to reduce fuel consumption and emissions via rotor sales using wind to push the ship forward but big questions around new technology remain but then the question is who bears the cost of this transition would this cost be just passed over to consumers like you and me so we will be paying more and more for imported goods so it is good to consider sustainability in shipping but then the countries that are at the receiving and the proposed bearing they need to be compensated there is also the current era to bridge a time of reshape demand and disrupted trade flows in a global pandemic creating supply shortages of various goods and containers to ship them in not to mention stranding hundreds of thousands of seafarers as many countries kept their borders open for goods but not people disruptions whether huge in the sense of a pandemic causing chaos in supply and demand are huge in the sense of a gigantic ship getting stuck in a small important canal have raised questions of whether these supply chains should be so long and whether manufacturing has to take place so far from the buying but it’s not a question easily answered most companies have taken hedging measures so they’re trying to diversify the suppliers they’re trying to rethink the supply chains uh but but reshoring is something very complicated for global trade because you can move the soloist in an orchestra but you cannot move the full philharmonic orchestra rebuilding competencies rebuilding the know-how the infrastructure having the competitive cost space all of that takes time okay the moment the internet you know international trade has brought enormous amounts of wealth for everyone in the world especially developing countries the global value chains have benefited developing countries that have low wages for low-skill workers so anything that disrupts international trade would not be good for the world so where is shipping heading in the end how big the ships will get where they’ll pass what they’re carrying from point a to b and how far point a and b are going to be from each other will depend heavily on the business decisions taken by the companies that manufacture the goods that ships carry all around the world and the answer is i think our lies at least in the the company strategies more than waiting on being infrastructured to be designed or route to be uh shaped for for ships and containers and cargos to go elsewhere there are so many other things that are happening in global trade 3d printing you know maybe for some of these goods we won’t need the physical route you know in 10 years or 15 years from now or maybe indeed we could semi produce things or have a more hybrid way of production if we rethink strategic stock dialing i think we could go or resort back to smaller ships and to much more agile global trade than we have in the past 10 years with the rapid you know push for bigger stronger faster but which also created a lot more vulnerabilities on the infrastructure and the trade routes themselves but other industry observers say there’s a larger discussion to be had beyond the pathways that bring products to consumers for me i think that that in some senses mistakes misses the forest for the trees it’s less about thinking about resiliency or localizing supply chains than thinking more more broadly about why it is that we rely on a system that’s so incessantly you know relies on this constant accumulation and circulation of goods a lot of which we don’t necessarily need right and to think about what it might look like to think about reducing consumption about building supply chain models that are not as reliant on constant and constant growth commercial shipping is more than 5000 years old it’ll keep evolving because it has to because the story of shipping is really the story of globalization the movement of goods across markets around the world where the shipping industry the most international of industries is headed from here is tied up with how we decide as a society to keep producing exchanging and consuming goods and under which conditions that’s a complex balancing act between governments businesses consumers and regulators shipping may bring the whole world together but it will and should take the whole world to determine where it’s going

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