New Trade Routes through the Arctic between Asia and Europe

 

Map of new shipping routes between Asia and Europe Source: The Economist

New Shipping routes between Asia and Europe 

The ice in the Artic is melting away at a record-breaking rate opening up new possibilities for shipping routes. Measurements taken in August 2012 found the levels of Arctic sea ice were at their lowest levels since satellites began measuring the ice in 1979. In 30 to 40 years, it is quite possible that there will not be no summer ice at all. This has led to an increased interest in shipping in the Arctic. New shipping routes opening up due to the melting ice could cut shipping times between Asian and European ports by up to a third. It is possible that the first commercial trade voyage could take place as early as summer 2013 led by China, and the potential value of goods travelling the new Arctic routes could become highly significant.

Xue Long 雪龙 expedition throught the Northern Sea Route 

China has been taking a strong interest in the region over the last decade, building a physical presence and using diplomacy and trade ties to engage in the region. The Chinese ship Xue Long (Snow Dragon) 雪龙 became the first ship to sail the Bering Sea after crushing the ice across the Arctic Ocean in August 2012. The icebreaker sailed all along the Northern Sea Route into the Barents Sea and returned by sailing a straight line from Iceland to the Bering Strait via the North Pole.

China has also set up a multidisciplinary research base with 18 researchers called the Yellow River Station on Svalbard the Norwegian archipelago (See map above) since 2004. The Xue Long 雪龙 voyage in summer 2012 was a culmination of China's research so far and a test of the Northern sea route to check out the feasibility of it becoming a new shipping route through the Artic that could link Asian and European ports. China has also recently commissioned a new 120m icebreaker ship to be built by a company in Finland to further its Arctic research. 

New Asian permanent observers on the Arctic Council in 2013 

The rules of the Arctic Council state that only countries with territories in the Arctic can become full members of the Artic Council. Nevertherless at the biennial meeting of the Council on 15 May 2012 in Sweden, 5 Asian countries: China, Japan, South Korea, Singapore, India and Italy became permanent observers. China, sees itself as a “near-Arctic state”, and had been seeking to become a permanent observer since 2006 (it had previously has its application rejected three times). But this time with Iceland's support and with the possibility of China and Iceland setting up a new Arctic forum, the members of the Arctic Council decided to widen the Council to include their Asian counterparts.

Interestingly, most of the new joiners were already observers on an ad hoc basis. The six new members will not have speaking or voting rights. But they will be able to influence decisions in the council’s six working groups with their expertise, research and potential funding of initiatives in the Arctic. China, for example, has led five marine expeditions in the Arctic since 1999, including the Xue Long 雪龙 voyage in summer 2012. Japan and South Korea may decide to conduct their research with their own icebreakers ships too. The new Asian observers will bring fresh new ideas to the Arctic region and advance the use of new faster trade routes between Asia and Europe over coming years. The Geo-Trade Blog will continue to follow developments in the Arctic.

Piracy on the high seas in the 21st Century – Somalia the new pirate base

Pirate Ship on the high seas

Far from the one-eyed barbarians and the Long John Silvers of folklore and fiction, pirates in the 17th and 18th centuries tended to come from highly skilled sailors who rebelled against the tyranny of their imperial masters. Once they had procured their own ship, articles were drawn up governing the conduct of the pirates. These articles were remarkably egalitarian. The captain of the ship was elected by the sailors and a quartermaster was elected to administer booty and to act as a counterweight in order to keep the captain’s power in check. Profits from shipping raids were distributed equally among all the sailors. When a pirate misbehaved, a meeting of all the sailors was called to determine the appropriate punishment. The pirates of the 17th and 18th centuries developed their own unique form of distributive justice.

New pirate base in Somalia in 21st century

Over the last decade Somalia has become synonymous with piracy. In 2010, alone nearly 1,200 people were taken hostage in the waters of Somalia. Rather than the more conventional 17th and 18th century "robbery at sea" piracy, Somali piracy takes the form of hijacking and extortion. This pattern evolved from so called "defensive" piracy that began early in the last decade as a response by local Somali tribal fishermen to unlicensed foreign trawlers and the dumping of toxic waste. These outsiders exploited the absence of a functioning Somali state capable of protecting its coastal waters.

The way the pirates operate is to take the commercial vessels usually by only firing warning shots before boarding the vessel. The goal is then to extract the highest possible cash ransom and to return the ship, its cargo and its crew in decent condition. So far this business model has proved very lucrative. It is estimated that Somali pirates may have earned around $238m last year alone.



Somali Pirate on board a hijacked commercial trade ship
know as a "mothership"

In 2008, almost all the attacks were in the Gulf of Aden – a passage for 20pc of the world's commercial shipping between Asia and Europe. But when international anti-piracy navy ships began to patrol these waters, the pirates modified their strategy to roam farther by using "mother ships" seized earlier as floating bases in the Indian Ocean. The below map sourced from The Economist shows the increased area of pirate operation in recent years:



Map of Somali Pirate Areas of Operation from 2008-2010


Piracy and ‘lawlessness’ in Somalia

A new study published in February 2011 shows that state failure is not necessarily a significant predictor of piracy. The study shows that for countries with very poor levels of governance, small improvements in such things as law enforcement, stability and security can actually lead to more piracy. 

Truly well-governed countries produce few pirates. However within Somalia– a so called "failed state", the report points out, most pirates originate from the relatively stable Puntland rather than the truly anarchic south and piracy is reduced when violent territorial conflict intensifies. The report argues that this is no coincidence: a basic level of law and order is necessary for pirates to ply their illegal trade.

The implications of this report are that Governments and multilateral organisations working on initiatives against Somali piracy in the region ought to focus on assisting Somalia and other neighbouring countries to truly enforce the rule of law. So far the EU has launched Operation Atalanta in 2008 and the UK has provided the Royal Navy's UK Maritime Trade Operations office in Dubai as a reporting hub for pirate activity. But much more needs to be done along the lines of Article 100 in the preamble to the UN Convention on the Law of the Sea:

"All states shall cooperate to the fullest possible extent in the repression of piracy on the high seas or in any place outside the jurisdiction of any state".

Until this happens, it is highly likely that the Somali pirates will continue with their devastatingly effective business model.

The Biggest Container Ships the World has ever seen

 

Artist’s impression of the new colossal “Triple E” container ship

Source: Maersk



Maersk Line, a Danish shipper, announced in February 2011 that it had ordered ten new colossal container ships. The new ships known as “Triple-E” ships will carry 18,000 boxes each, that is 2,500 more than the biggest container ship currently in service also operated by Maersk. The new vessels will come into service in 2013.

The new ships will sail the trade routes between Asia and Europe, arriving in Europe packed with Chinese-made TVs and fridges but sailing back much lighter. Container shipping rates are rising and global trade is predicted to grow by 6-8% this year. Some believe global trade in shipping could grow even further— Clarksons—the world’s biggest shipbroker, is predicting growth of around 10%.

From the 1990s and into the first decade of the 21^st century the volume of container cargo traded through the world’s biggest container ports has increased nearly sixfold as globalisation has taken hold.

Twenty years ago more than half of the top 20 container ports were in the US or Europe. Now, Asia's strength as an exporter is in evidence in the location of the top container ports. Singapore now has the top spot. 14 of the top 20 container ports are now in Asia, with eight in China. The below chart from the Economist's recent survey of container ports charts the changes of the last 20 years:

Invention of the container ship

The first container ship voyage took place on 26 April 1956, the ship was an oil tanker whose deck had been strengthened to accommodate 58 well-filled boxes each some 30ft (9 metres) long. The boxes were shipped down the east coast of the US into the Gulf of Mexico and on to Houston. They survived the journey. They were not swept unrecoverably into the sea, as some doubters had predicted.

Trade was ready for a new mode of transport. The savings made by moving freight from roads to sea were huge. For centuries the trade of the world had depended on there being a vast labour force at every port to handle goods in manageable quantities. Container shipping required less dock labour and as a result savings of as much as 25% could be passed on to the shippers. As containerisation spread around the world, ships were turned round more quickly with even more savings.

By the 40th anniversary of container shipping in 1996, around 90% of world trade was moving in containers on specially designed ships. At that time Bill Clinton correctly proclaimed that container ships were aiding to “fuel the world’s economy”.

Since then Container ships have continued to grow and grow.

But container ships are still slow

Some fast ships have been developed, but these are mostly passenger ferries. The big container ships that carry most of the world's long-haul manufactured exports (by weight) travel at 23 knots (26.5 miles an hour) at best, and barely 17 knots in heavy weather.

The jet age that sank passenger liners has so far failed to take hold on the ocean. The Boeing 707 jet transformed aviation because it could fly faster, farther and higher than propeller-driven aircraft, clear of storms and turbulence.

Ever since the Vikings built their longboats it has been accepted that the way to move quickly across water is to have long, thin boats. This is because the faster a ship travels, the more water it drags along with it. Not only does this drag consume much energy, it causes high-speed vessels to squat low in the water, pulled down behind the “captive wave” at the bow. Propellers vibrate at high speeds, causing shocks that can break hulls. Hydrofoils that lift the hull out of the water and use water jets are fine for passenger ferries, but not for big, heavy container ships.

In the 21st century, container cargo of cars, tractors, cookers and washing machines still travel at about the speed of a running man. It takes a ship full of car parts a week or more to cross the Atlantic and around three weeks to go from Asia to Europe. The next challenge will be to design a faster colossal vessel capable of carrying 18,000 containers but at a much greater speed. Surely with such high inter-continental trade forecasts between Asia and the US and Europe, the incentives to develop a new high-speed container ship have never been better.