Beyond Suez Canal: Essence of global maritime choke points

GLOBAL LOGISTICS BUSINESS has come to define commerce and supply chains in many different ways. For goods that can only realistically transported by seas and waterways, seafaring has become indispensable in global logistics, handling bulky, heavy, liquid, solid and gaseous goods across the globe in huge quantities. Efficiency of supply chains through this method of transportation has been enhanced through the use of containers for shorter turnaround time, early delivery at precise locations for goods that are easy to assemble and disaggregate or through the use of specialised cargo ship for specific products because of their peculiarities. Petrochemicals, cement, sugar, flour, animal feed, whole grains and some chemical raw materials are in this latter category. What is lost in terms of time taken for seas transportation is usually gained through cost-effectiveness arising from the sizes of vessels carrying tonnes of products on single trips over long distances. Therefore, many of such ships have to pass through some narrow maritime corridors that allow single or few ships at a time, leading sometimes to backlog of ships that have to wait in line for their turns before having passage access through such narrow corridors.

Each of these peculiar maritime corridors, referred to as a choke point, is a point of natural congestion connecting two wider and important navigable passages. They are naturally narrow channels of shipping or congestive pathways in some of the world’s famous shipping routes having high traffic because of their strategic locations at indispensable marine trade routes. These international choke points have drawn international attention and fame because of the sizes of ships, commodities transported and their financial worth. These have subjected such chokepoints to high international security conflicts and cross-border terrorism threats. Because these choke points allow for a drastic reduction in travel time and distance to be covered on open seas from points of origins to destinations, avoiding these maritime choke points of the world would contribute to higher costs of transportation, huge financial losses in the bulk cargo logistic, particularly in oil freight shipping operations as most of the oil shipping and transit operations involve navigating through them. Some of the prominent maritime choke points include the Malaccan strait in the Indian Ocean, the Gulf of Hormuz in the Middle East, the Strait of Gibraltar that links the Atlantic Ocean directly to the Mediterranean Sea, the Suez Canal linking the Mediterranean and the Red Sea, the Panama Canal linking the Atlantic with the Pacific Ocean, the Strait of Bosporus (Turkish Strait) linking the Mediterranean Sea to the Black Sea, the three Danish Straits linking the Baltic Sea with the North Sea and the Strait of Bab el-Mandeb, forming a gateway for vessels to pass through the Suez Canal, through the east coast of Africa.

In addition to trade, maritime choke points are increasingly becoming more important for other reasons. They are becoming issues of diplomatic relevance and their locations have implications for global security concerns, energy security and trade as well as military purposes, as recent events have proven. Because of their strategic importance and for a stable world economic order, such choke points need to be kept secure. This will particularly be more needful in regions with unstable governments and those that are crisis-ridden so as to avoid putting the seafarers in the harm’s way. This will require strategic and collaborative efforts of agencies such as the World Trade Organisation (WTO), United Nations (UN), United Nations Conference on Trade and Development (UNCTAD), North Atlantic Treaty Organisation (NATO), International Energy Agency (IEA), regional economic blocs and national governments bordering on such choke points. Where political situation is stable, but the threat of maritime piracy, hijacking, and other crimes is real, programmes should be in place to curb such crimes and ensure minimal or no disruption to maritime activities in such areas. Some advocates have suggested that, in order to successfully curb this threat, alternate shipping routes were considered expedient. It has also been proposed that key economic powers like United States and other European countries try to use their naval supremacy to ensure the safety of tanker vessels using these choke points. This tactic has also been suggested as a way to counter the hostile political tactics in certain choke points of the world. But this approach and seeming solution are gradually raising another set of problems. The Bab el-Mandeb Strait at the Horn of Africa is now a ground for competition as China gains foothold with the coming of its strategic military base to the area where China would very likely test its strength against rival countries such as India and the US. Apart from advancing China’s strategic interest, it will increasingly serve as place to counter the influence of the US or the EU within the geopolitical area.

It is significant that, of the many maritime choke points, Africa has connection with three, namely the strait of Bab el-Mandeb, the Suez Canal and the Strait of Gibraltar. These underscore the importance of Africa in global maritime trade and logistics. In particular, it means Africa should take interest in what happens at these choke points with regards to trade and security. The coming on board of the African Continental Free Trade Area (AfCFTA) would make the interest in these choke points more fitting for Africa. Just days ago, a huge vessel carrying large number of containers got stuck across the narrow Suez Canal, preventing the passage of any other ship either way. Considering that 10 per cent of global maritime trade logistics passing through Suez, the cost of this obstruction is expected to be enormous and will increase with the number of days the obstruction persists. With about 600,000 barrels of crude oil shipped from the Middle East to Europe and the United States via the Suez Canal every day, and about 850,000 barrels a day shipped from the Atlantic Basin to Asia also via the Suez Canal, it is easy to figure out how a prolonged obstruction of the Suez Canal will affect energy supply and land transportation in the destination countries in days ahead, particularly if they adopt just-in-time delivery and utility. Although the SUMED pipeline that runs parallel to the Suez Canal might ensure continued flow of some crude between the Mediterranean and the Red Sea, it has been surmised that the European and North American refiners could decide to replace Middle East oil with oil coming through sources and channels other than the canal.

It has also been observed that, for commodities such as oil, LNG, coal and iron ore, the world demand and world supply must balance. But, because one source can often be substituted by another, the blockage of the Suez Canal will affect the spot price of commodities locally and the charter rates for the ships that carry them, but the trade will continue. How African countries in the regions bordering on those three straits or canals will fare economically within this period is an important question that needs to be examined and answered. For instance, in the framework of AfCFTA, it is important to figure out how the landlocked countries in the northern parts of Africa are impacted in trading activities and logistics. Beyond the present obstruction, the Suez Canal is prone to a huge operational problem of such pirating attacks. Ships waiting in line for the obstruction to be cleared could become victims of attacks, particularly at the strait of Bab el-Mandeb. Realising this, operators of other choke points would be making spirited efforts to keep their own operations going. The straits of Gibraltar, famed for being the closest maritime link between the African and European continents, will be affected by the obstruction in Suez until the canal is cleared.

The importance of other choke points in global maritime trade is noteworthy. Strait of Malacca, waterway connecting the Andaman Sea in the Indian Ocean and the South China Sea in the Pacific Ocean is the shortest shipping route between the Far East and the Indian Ocean. As the main shipping channel between the Indian Ocean and the Pacific Ocean, it is one of the most important shipping lanes in the world, linking major Asian economies such as India, Thailand, Indonesia, Malaysia, Philippines, Singapore, China, Japan, Taiwan, and South Korea. Piracy has been a problem in the strait, considered as part of the Maritime Silk Road that runs from the Chinese coast towards the southern tip of India to Mombasa, from there through the Red Sea via the Suez Canal to the Mediterranean, there to the Upper Adriatic region to the northern Italian hub of Trieste with its rail connections to Central Europe and the North Sea.

Imagine the political and economic interest of China in the South Asian region as China wants access to the Indian Ocean through Myanmar. The Strait of Malacca is a crucial route for energy and trade, controlled by Indian navy, but crucial to China’s energy and trade. Again the diplomatic stand-off between India and China could turn the strait to a hot zone, with some vessels prevented from passing through as India is in a position where it can monitor the traffic at the Malacca Straits or the Lombok and Sunda straits.

The Strait of Hormuz lies between the Persian Gulf and the Gulf of Oman, with great economic and geopolitical significance and linking the sea passage from the countries on the Gulf – including Iraq, Kuwait, Saudi Arabia, Bahrain, Qatar and the United Arab Emirates – with the Arabian Sea and beyond. In 2019, the Strait of Hormuz was the world’s single most important oil passageway, forming a choke point between the Arabian Gulf and the Gulf of Oman. It is the only route to the open ocean for over one-sixth of global oil production and one-third of the world’s liquefied natural gas (LNG). Of the estimated 17.2 million barrels of oil per day moving through the strait, including most of the oil from Organisation of Petroleum Exporting Countries (OPEC) members of Saudi Arabia, Iran, the UAE and Kuwait, the Strait of Hormuz is significant in the context of global energy trade and energy security as about a fifth of the world’s oil, nearly 21 million barrels a day, passed through the Strait of Hormuz in 2018 alone. Trouble, however, is that is the strait is at the centre of rising tensions and the maritime area has been in the news for the wrong reasons following explosions on June 13,2019, that damaged two oil tankers just a month after four other vessels were sabotaged nearby.

 It is important to also emphasise that Iran has shown some high-handedness and belligerence at the strait in response to US sanctions against Iran, involving attempts to stop Tehran’s oil exports and strangle its economy. In response, the Iranian government has threatened to cause problems for oil tankers in the Strait of Hormuz. Iran’s intransigence is increasingly becoming a problem in the sense that, in May 2019, four vessels – including two Saudi oil tankers – were attacked near Fujairah just beyond the strait, while the June 13 attacks on two oil tankers in the Gulf of Oman raised fears about the global oil supply and new questions about the security of shipments through the Strait of Hormuz. On July 11, the UK said that three Iranian vessels had unsuccessfully tried to impede the passage of a British commercial ship, a claim Iran rejects. A week earlier, the UK seized an Iranian oil tanker suspected of transporting crude oil to Syria in contravention of European Union sanctions off the coast of Gibraltar.

The Panama Canal is one of the major artificial waterways in the world connecting the Atlantic and Pacific Oceans and facilitates maritime transit to thousands of ships, ranging from private crafts to large vessels. Like Suez, it helps to circumvent long ocean routes by providing a shortcut. Going by the report of 2016, the most recent year for which comparable figures are available, the strait was the world’s busiest sea route for oil. It carried about 19 million barrels a day – more than the 16 million barrels a day that went through the Strait of Malacca, a major international waterway in the Indian Ocean. Realising how important these choke points are to global supply chain and international trade, Africa’s place needs to be thoroughly reviewed and accorded greater recognition and reward for its position. The continent also needs to shield its space from being used for perverse influence by forces trying to exert overbearing power play in the region. Africa needs to see itself in its true sense of relevance to the world economy and global logistics and should brace properly for it.