THE crisis in the Suez Canal, where the containership Ever Given was stuck for six days, has caused the global shipping industry to rethink things. Many good questions were raised, some of which have complicated answers and some of which have no answers at all.
We have heard the oft-quoted statistic that 90% of the world’s good travels on cargo ships. In fact, one of the best books on the containerization revolution is entitled “90 Percent of Everything.” Thanks to globalization, the human family relies on water-borne transport more than ever before, and the Suez crisis revealed serious vulnerabilities in the system. Choke points exist and the costs of something going wrong can be astronomical. Recall that Egypt is asking for just under one billion dollars in reimbursement for freeing Ever Given.
For most, a catastrophe in the shipping world would be a bad thing. But let us not forget that there are people out there who would like nothing more than to shut it down. I heard this view expressed in certain media outlets during the Suez incident. Imagine an Osama bin-Laden watching the Suez crisis unfold. “Do you mean all we have to do is sink a container ship in the Suez or Panama canal and we bring the world to its knees? What if we sink a giant oil tanker?” The 2001 World Trade Center attack would pale next to a disaster of that magnitude. Beyond terrorists, there are anti-globalists and radical environmentalists who would similarly welcome a shutdown of global trade. A colleague of mine who is a former member of Greenpeace expressed joy when Ever Given got stuck. “That will show them!” he said.
For those who hoped the Suez would cause the industry to pause and rethink its commitment to giant ships, there is unwelcome news. Shippers have orders for even larger ships and no one is cancelling. Now that the 20,000 container threshold has been breached, designers are looking ahead to 25,000 and even 30,000 container carriers. In an industry where costs are so important, any economy of scale, no matter how small, translates into big savings.
Which is what all of this has to do with the Arctic. If ships are not going to get smaller, the other option is to adjust to accommodate them, and this takes two forms. First is infrastructure. Port cities can spend massively to upgrade their facilities to accommodate the giant ships or they will no longer be a port city. Container ships already need a minimum of fifty feet of depth and almost a quarter mile of dock frontage.
Many countries cannot afford to upgrade even one port, let alone several. For example, UK, certainly no small country, has put most of its investment dollars into Felixstowe, a massive container port that will hopefully serve the entire nation. Even the United States is thinking in terms of two or three mega-ports on each coast. The effects of such a shift to a small number of megaports can be imagined. Those cities left out will shrivel while those chosen will boom. Another aspect of infrastructure upgrade will be the waterways themselves. Egypt has already announced ambitious plans to expand the Suez and Panama is taking another look at their canal. Other choke points such as the Malacca Straits are also on the table.
The second way the world will adjust based on Ever Given’s halting of world trade is to look for other, less vulnerable routes. For the past few years, countries who rely most heavily on maritime commerce have been considering the Arctic route. As polar ice melts, those waterways that historically have not been safe or cost-effective are starting to look more desirable. Expect a dramatic increase in investment in Arctic sea routes.
Consider one more fact: 90% of all commercial ships are built in three countries: China, Japan, and Korea. Will that impact future conversations about global shipping? Perhaps the choke point in production will loom as large as the one in infrastructure.
BC Cook, PhD lived on Saipan and has taught history for 20 years. He currently resides on the mainland U.S.
BC Cook
