by Dr. Sebastien Goulard

On March 23, 2021, a giant container ship became stuck in the strategic Suez Canal, blocking one of the world busiest waterways. It may takes several weeks to dislodge Evergreen’s Ever Given 400-meter-ship, and enable other ships to cross the canal. This accident highlights world’s dependence to the Suez Canal and shows that China’s Belt and Road Initiative must be a top priority to develop new trade route alternatives.

The Suez Canal and world trade

Since its inauguration in 1869, the Suez Canal has been one of the most important waterways, connecting Europe to Asia. Over $9,6 billion transported goods cross the Suez Canal every day. 

A large proportion of the oil and gas imported from the Gulf region to Europe cross the Suez Canal. According to Reuters, “in 2020 Europe imported 550,000 bpd of crude from sources located east of Suez”. Tankers transporting oil from Kazakhstan, Azerbaijan, Russia to Asia are also awaiting entry to the canal. The Suez Canal blockade may create oil price instability for the next weeks.

Straits and world trade

The Suez Canal is not the only maritime trade chokepoints.  The Suez Canal, the Panama Canal, the Strait of Malacca, and the Strait of Hormuz are strategic passages that serve as hubs for shipping lanes. Accidental blockades like the current one in the Suez Canal are not the only threats to maritime trade. Piracy, terrorism or acts of war in these chokepoints can disrupt world trade. That is the reason why some countries are promoting and constructing alternative routes to reduce threats. We can for example mention the Kra Isthmus Canal that may be built in Thailand.

This is also one of China’s motivations to build the “Belt and Road Initiative”.

The Belt and Road Initiative as a network of alternative routes

China has become the world largest trading power, and the safety of trade routes has become a major concern. The Belt and Road Initiative (BRI) launched by President Xi Jinping in 2013 primary aims at boosting trade between China and the world, but another objective is to create new routes. Most trade from and to China is made through maritime roads, but with the BRI, China is investing in new continental routes that connect  Southern China to Southeast Asia and Western China to Central Asia, Pakistan and Europe. Thanks to the BRI, new railway lines are operating in Eurasia. The main line connects Chinese provinces to the European Union through Kazakhstan, Russia and Belarus, but other lines include a Xinjiang to Turkey railroad, or the China-Mongolia-Russia corridor.

However, the current railway lines from China to Europe have limited transportation capacities, and cannot transport more than 10% of the global amount of goods shipped between China and Europe.

Regarding maritime roads, China is also developing a polar route that would go from Dalian, Vladivostok, Murmansk and then Norway. Global warming will make this road even more useful in the future. But any accident or oil spill on the polar road would be an environmental catastrophe.

Beijing is also constructing new corridors that would avoid some of the most strategic chokepoints. For example, the China Pakistan Economic Corridor with the port of Gwadar will shorten routes from the Middle-East to China and avoid the Strait of Malacca.

Building new roads

The Suez Canal blockade shows us that developing new connections is a priority to avoid trade disruptions. China keeps developing new alternative. The recent 25-year strategic agreement signed by China and Iran will boost connectivity in the Middle-East and Central Asia regions thanks to major investment in transportation.

In spite of some tensions, the European Union and China should continue to work together to develop new routes, and especially continental routes, that will make the two regions less dependent on the Suez Canal. New railroad connections have to be developed between the EU, Russia and China.

The BRI: creating alternatives to the Suez Canal
Tagged on:                         

Leave a Reply

Your email address will not be published. Required fields are marked *