The almost week-long blockage of the Suez Canal last month by a giant 250,000-ton container ship once again raised the issue of alternative routes for world shipping. The Netherlands-bound MV Ever Given ran aground while passing through the canal on 24 March; it took six days to refloat it. Several more days were needed to clear the backlog of ships waiting to pass through the canal from the Mediterranean and Red Seas.
While Egypt earns around $6 billion a year from canal tolls, it has been estimated that the cost to global trade of the Ever Given blockage was around $10 billion per day. Delays also led to shortages of oil and liquefied natural gas (LNG), and higher prices. The search for an alternative to the Suez Canal has, as a result, been intensified.
The latest proposal is to build a canal to connect Israel’s Red Sea port of Eilat to the Mediterranean. It is being pushed by Israel and the UAE, but is opposed by Egypt. Such a project will be extremely costly. According to experts, digging a 250-kilometre canal will cost at least $100 billion due to the hilly terrain. The Suez Canal is 100 kilometres shorter and rises by little more than 100 metres.
Egypt could probably build a new waterway alongside the existing canal, or even widen it, at a third of the cost of the Israel-UAE project. Even if the latter insist on their own project, it seems unlikely that they will overcome Egyptian opposition. Cairo can be expected to come up with a more competitive solution and pre-empt any moves on the other side of the Sinai Peninsula.
An estimated 12 per cent of world maritime trade passes through the Suez Canal. Although this cannot be ignored, the route is not indispensable.
When Britain, France and Israel occupied Suez in 1956, passage for all ships was halted for a while, but world trade continued. When Israel occupied the canal in the 1967 Six Day War, passage was stopped again, a situation that lasted for eight years. Global trade, meanwhile, continued.
The obvious alternative, of course, is for ships plying between Asia to Europe to sail around southern Africa’s Cape of Good Hope. Although this is more costly in terms of fuel and time, it does not create a global trade crisis.
Overland routes are also available, with roads, railways and pipelines in use. The Kirkuk-Yumurtalik Oil Pipeline, built in the 1970s, is a good example.
Turkey occupies an increasingly important position in terms of railway alternatives. This importance is sure to become more tangible once the Istanbul-London-Beijing Railway, put into service last year, is integrated into China’s One Belt One Road (“Belt and Road”) Initiative. The current Trans-Siberian Railway, located further north, is a possible alternative, but it is an inadequate route to carry goods from East Asia, especially China.
Railways are critical for inland passenger and freight transport, but the cost of overland intercontinental transport is prohibitive when compared with the price of sending goods by sea. The only cheaper transportation is via pipelines, which are limited to liquids and gasses.
When the search for a “north-west passage” between the Atlantic and Pacific Oceans proved fruitless, the US reduced the need for such a route by opening the Panama Canal at the beginning of the twentieth century.Russia, however, views northern routes into the Pacific as essential, not only economically but also militarily and strategically. It paid a heavy price by not being able to use the route from its northern coastline and ports during the Russo-Japanese war of 1905, but solved the problem, at least militarily, by having the largest icebreaker fleet in the world by far. The commercially expensive icebreaker ships may not offer a financially competitive solution, but global warming appears to have come to Russia’s aid on this issue.
The noticeable thinning of the ice sheet covering the Arctic Ocean in recent years has reduced the need for icebreakers. Moreover, merchant ships have been equipped with ice-breaking capabilities, enabling them to make voyages through the Northern Sea Route by themselves.
A Russian ship transporting LNG from Yamal, one of Russia’s largest natural gas fields on its northern coast, to China, made its return journey between 27 January and 19 February last year, in the middle of winter and without the need for icebreaker assistance. The Northern Sea Route is thus no longer impassable, and shipping is starting to use it increasingly.
In 2018, Russian President Vladimir Putin ordered the annual average cargo volume via the Northern Sea Route to be increased from 30 million tons to 80 million tons by 2024. China, one of the first countries to try this route for commercial purposes, has been sending an increasing number of ships to Europe via the Arctic Sea since 2013. A container ship sailing from Tokyo to Hamburg will take around 48 days via the Suez Canal, but only 35 days via the Arctic.
It is no coincidence that China became an observer member of the Arctic Council in 2013, the year that it started to implement its Belt and Road Initiative. With China’s increasing mobility, Russia is no longer alone in efforts to make the Northern Sea Route more viable. China’s initiative does not solve the problem of its physical distance from European markets, and it has been looking for faster transport routes. Moscow and Beijing both seem to have found what they were looking for.
Putin summed up Russia’s attempts in two sentences in his speech at the Second Belt and Road Forum for International Cooperation held in Beijing on 25 April, 2019: “We attach great importance to the development of the Northern Sea Route. We are evaluating the possibility of joining this with China’s Silk Road so that we will create a global and competitive route connecting East Asia to Europe.”
The passage is also important for Japan and South Korea, two of the leading industrial nations in the region. Both are increasingly using the northern route.
Though Western shipping companies are hesitant, the world’s largest container shipping company, Denmark’s Maersk, started using this route three years ago. The route is no longer an obstacle for maritime transport and has become increasingly attractive.
Experts predict that the Northern Sea Route will be ready to be used at full capacity by about 2030. The Suez Canal will remain important for maritime transport, especially between the Mediterranean basin, including Turkey, and South and South-East Asia. However, the number of ships using the alternative route is expected to rise, led by Russian and Chinese vessels.
The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.