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The stranded container ship disruption includes a warning to nations overly reliant on trade with distant lands

The Suez Canal, the commercial artery in Egypt that allows ships between Europe and the Middle East, India and Asia not to sail around the entire African continent, was blocked for nearly a week after a giant container ship called Ever Given owned the Taiwanese company Evergreen Marine ran aground on the banks of the canal after being killed on Jan. March had apparently drifted off course due to strong winds

The ship that blocked the canal, through which an estimated 13 percent of world trade passes, was partially floated again on Monday morning, raising hopes that the waterway could soon be cleared

The blockade is believed to hold $ 9 billion per day Some ships that normally pass through Egypt have to make a detour of 3Make 500 miles over the Cape of Good Hope in South Africa and extend the trip by up to 12 days – not catastrophic, but not insignificant additional time and costs for already complex tasks global supply chains

The container capacity of the largest ships like the Ever Given has almost doubled in the last decade, but much of the infrastructure they rely on, such as B. Canals, has remained largely the same The Financial Times has explained the specific hydrodynamic challenges of ships like the Ever Given face

This is not the first time the Suez Canal has been blocked since its completion more than 150 years ago.After the 1967 Six-Day War between Israel and several Arab countries, Israel occupied Egypt’s Sinai Peninsula as far as the eastern bank of the canal, The Waterway was blocked for eight years and trapped 15 ships until the route reopened in 1975 (your crews formed a yacht club and watched movies on a Bulgarian ship The Swedes had a pool)

This recent blockade, while resolved relatively quickly and without catastrophic consequences for world trade, shows the weakness of the argument that geography does not matter in today’s world.Some Brexiters have argued that Britain is the one with the EU, a block directly Next door, could make up for lost trade by trading more with distant nations The UK’s application to join the catchy Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP), a trade bloc made up of Mexico, Australia and Vietnam despite being clearly not a Pacific nation, embodies this belief

However, the infrastructure of the global trading system on which such a worldview depends is far more fragile than it may seem. Ship flows are prone to any number of events, from bad weather (like in January when several dozen containers fell into the sea, after a ship from the same company, Evergreen Marine, was hit by strong winds) to war and blockades. An increasing reliance on trade with countries further afield mathematically increases the likelihood of disruption to trade routes, as the number of potential points at which the Trade can be disrupted increases

World trade has therefore been growing more slowly than GDP for some time.Part of the discrepancy can be explained by low demand and increasing protectionism, but at least part of the story is the weak state of the infrastructure that sustains trade, Vasuki Shastry told me, a researcher at the Chatham House think tank “The global shipping industry appears to be a cartel As with all cartels, this is not a very good situation for the world economy There are literally three or four massive shipping container shipping companies that control most of world trade. “The four largest companies of this type control nearly 60 percent of the market between them, according to Alphaliner, a research firm

The Suez Canal is far from the only potential pressure point where trade could be severely restricted by accident or intent, from the Malacca Strait between Malaysia and Indonesia to the Panama Canal in Latin America.Control of trade through the South China Sea is a major reason for China’s controversial claim to much of it.As the Suez Blockade shows, anything from a widespread war in East Asia to an ill-timed gust of wind in Egypt can hinder global trade flows – with potentially devastating consequences for nations that are overly focused on Trade with distant lands are dependent

The argument that geography doesn’t matter has always been more of a fair weather argument, and the blockade in the Suez Canal is a preview of what could happen if the mood in world politics changes

Blockade of the Suez Canal

World News – UK – The blockade of the Suez Canal is a reminder that geography matters in trade

Source: https://www.newstatesman.com/world/middle-east/2021/03/suez-canal-blockage-reminder-geography-does-matter-trade