- Fernanda Paul
- BBC World News
3 hours ago
The six days that the Ever Given freighter was stranded on the Suez Canal were enough to cause major problems in international trade around the world.
The price of oil has risen sharply, and numerous companies have been seriously affected, from domestic transport suppliers to retailers, supermarkets and manufacturers.
According to the analysis of the German insurer Allianz, this can generate a reduction in the annual global commercial growth between 0.2 and 0.4 percentage points.
That’s because this sea crossing is vital for supply chains around the world. But it is not the only one.
The Suez Canal joins a long list of routes that are fundamental to the functioning of the global economy. What are four of these pathways and their main characteristics?
1. Suez Canal
This portal between East and West, located in Egypt, started operating in 1869. It is 193 km long and connects the Mediterranean Sea to the Red Sea.
In 2020, 19,311 ships passed through there, carrying around 1.21 billion tons of cargo, according to the Suez Canal Authority (ACS). This represents 12% of global trade, which makes it vital for the normal functioning of the world economy.
Among the goods that pass through there, one of the most relevant is oil. According to ACS estimates, almost 2 million barrels of oil pass through the channel every day. In addition, about 8% of liquefied natural gas.
“This channel is very important to supply Europe,” says Spanish naval engineer Jorge Pla Peralonso, a specialist in maritime traffic.
Without the Suez Canal, shipments traveling between Asia-Pacific, the Indian Ocean, the Arabian Sea and Europe would have to cross the entire African continent, which would increase costs and substantially extend travel times.
One of the alternative routes, passing around Cabo da Boa Esperança, takes almost nine more days.
According to Peralonso, this channel has only been closed three times in history, due to political conflicts. “And the crisis was huge, even without the volume of traffic that exists now,” he says.
The channel is also an important source of income for Egypt. Even before the pandemic, trade that passed through contributed 2% of the country’s Gross Domestic Product (GDP), according to an analysis by Moody’s Investors Service.
2. Panama Canal
The opening of the Panama Canal in 1914 revolutionized maritime trade in the world.
For more than a century, one of the great works of Latin American engineering in the 20th century constituted the shortest path between the two largest oceans in the world: the Atlantic and the Pacific.
Almost 6% of the world trade transits there: more than 13 thousand ships cross from one side to the other annually to transport their goods.
The dimension is gigantic: the channel is on 144 maritime routes connecting 160 countries and destined for around 1,700 ports.
It is also crucial for Panama: in fiscal year 2020, the direct contribution of the channel to the country was 2.7% of GDP, according to data from the Panama Canal Authority (ACP).
“It is a great source of revenue for Panama. It is a very important step for all traffic to the United States and is obviously an alternative to east-west traffic in the world,” says Peralonso.
“For the Latin American region, it is essential. Most countries benefit from this channel, there is a lot of trade for the Caribbean and the Caribbean for the Pacific.”
But this channel, in comparison to the others, is more complex. It is built on the basis of a system of locks that, although it has allowed it to function uninterruptedly, may be its main weakness, because it depends on the rains to function.
In recent years, especially in 2016, the channel has been expanded to optimize water use.
But the route suffered one of its worst natural crises in 2020, when it was discovered that it was running out of water.
The lack of rain in 2019 called into question the complicated mechanism of locks that moves ships from one sea to another.
Thus, the institution responsible for the channel continues to work on several measures to maintain its operation, including reducing the number of ships that cross it.
3. Strait of Hormuz
It is undoubtedly one of the most strategic sea crossings in the world, connecting oil producers in the Middle East with the main markets in Asia-Pacific, Europe and North America.
With a length of about 160 km, the Strait of Hormuz is, unlike the Suez and Panama canals, a natural sea crossing and is not controlled by any country.
The strait connects the Persian Gulf to the Gulf of Oman (where there are countries like Iran, Kuwait, Saudi Arabia, Bahrain, Qatar and the United Arab Emirates) and the Arabian Sea.
At its narrowest point, the channel separates Oman and Iran by only 33 km. It has two sea lanes, each measuring just 3km.
Although there is no official traffic data for this channel, according to the United States Energy Information Administration (EIA), about a fifth of world oil exports pass through here.
In other words, an average of almost 21 million barrels of oil transits a day on this sea crossing. This represents, according to the EIA, 21% of the world consumption of liquids derived from oil.
Most of the merchandise (oil) that passes through this strait comes from Saudi Arabia and its main destinations are the Asian markets of China, India, Japan, South Korea and Singapore.
It is to be expected, then, that this area will be the center of tension between several countries.
In 2018, by the way, it gained prominence after Iran threatened, once again, to block the passage. This came after Donald Trump pulled the United States out of the nuclear deal, imposing severe sanctions on Tehran.
Iran’s threats to block the passage worry the world, because if this route becomes impractical, the world oil supply would fall 20%, according to data compiled before the last American sanctions, published by the newspaper The Washington Post.
However, Peralonso says it is a warning to “put pressure”. “It is very difficult for a country that lives on oil to close its flow,” he says.
4. Strait of Malacca
This sea passage extends for about 930 km between the Indian and Pacific oceans. In its narrowest part, facing Singapore, it is only 2.7 km wide.
According to the publications The Atlantic e Sea Trade Maritime84,000 ships cross this strait each year, representing 25% of world trade.
Two-thirds of the volume that passes through the strait is crude oil from the Persian Gulf. There are about 16 million barrels destined, mainly, to China and Japan. But the route is also important for bulk cargo and containers.
The strait has become increasingly important for economic powers such as China, Japan and South Korea, but also for emerging Southeast Asia.
“This is a fundamental path for all the exchanges of goods that exist between the Middle East and the Far East. It is a fundamental traffic between India, China and the Persian Gulf,” says Peralonso.
But China does not want to continue depending on this strait, because many nations have geopolitical interests there.
So in 2013, Chinese President Xi Jinping launched an ambitious infrastructure project called the China-Pakistan Economic Corridor, as part of the New Silk Road, which the Asian giant plans to complete in the coming years.
The goal is to connect western China with the Arabian Sea and the Indian Ocean via Pakistan.
And China’s reason for supporting the megaproject is strategic: the Asian giant wants to achieve more practical and efficient land access to the Indian Ocean than the path it has taken so far, through the Malacca Strait.
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