Suez Traffic Jam, the alternative options - R R Padmanabhan, Director - Exim Academy

 Suez Traffic Jam, the alternative options 

The Suez Canal crisis that hit the international trade like a thunderstorm and held its hold for more then 3 weeks still continue to be in limelight in the discussion of the international public.  This time it is not for the containers held on both sides of divide but for the compensation sought by the Suez Canal authority against the liner management.  It is not only phenomenal but also perhaps highest in the maritime history. 

Few questions that pop up now and then in everyone’s mind these days. If the international transit is so fragile as having to depend one single source, what are we going to do about it? 

Are there not other alternatives available for the international business? 

If available, are they sustainable in terms of cost and time? 

In the past 20 years or so, world community is coming together in terms of business in spite of nationalism rearing its ugly head now and then.  The world is increasingly becoming more and more interdependent.  Men and Materials must move freely across national boundaries to serve and be served.  So, when the movement is so essential, then it is also important that the transit routes are also safe and reliable.  At the same time, such route must be under international controls and safeguards. 

It is in this background, the alternative options were explored. Both Russia and Israel talk of alternative and present their claim backed by certain fundamentals.  Apart from these, there are alternatives like Cape of Good Hope and China’s Steel Camel.

The Chinese Steel Camel

Courtesy: The Straits times.

While the first three are a combination of sea, rail and road, the last one is quite interesting.  It is a simple straightjacket solution of moving the goods through rail work.  This rail network forms part of China’s Belt and Road Initiative (BRI).  In fact, the when BRI was envisaged and executed, even the Chinese would not have thought that one day their rail network traversing Asia in to Europe would an alternative to Suez Canal.  The container hauling trains are euphemistically called as ‘ Steel Camel’.  The word Camel conjures up the ancient way of moving goods and men by camel across deserts. Camels were called as desert ships then! But the difference this time the movement is done through trains.  Hence is the name, ‘Steel Camel’

The Israeli Option

Courtesy: harretz.com

The Israeli option considers linking Red sea and Mediterranean rail link.  Earlier back in 2012 it was not considered viable but now with Suez Canal blockade starring, Israleis think that this could be a viable option.  But the constraint is that it would involve both sea-rail-sea links.  It means that handling would be more at least in 2 places.  Besides, the port Eilat has to be expanded to accommodate more cargo and rail link up to Ashkelon and Ashdod.  But according to experts this seems to be more a knee jerk reaction than a feasible option.  Widening the port Eilat and augmenting the rail link may end up being ecological disaster.  Back in 1967, at the height of Arab Israeli War, Egypt blocked Suez Canal for Israelis.  For the limited cargo of Israel at that point of time, the port Eilat was sufficient.  But for catering to the global volumes to replace Suez would be extremely challenging environmentally, economically and politically.  Egypt would not be keeping quiet to wait and see its major source of income getting eroded by Eilat port.  It would rather widen and deepen Canal so that such disaster does not happen.

The Russian Alternative

Source: R T Business News

Russia proposes and actually starting using its Northern Sea Route for the purpose.  The route till few decades ago was treacherous and required icebreaker to sail. But now she is using nuclear icebreakers to improve accessibility and also the route is made navigable with the rapid melting of Arctic. The Russian Government is pushing this project through is quite evident when President Putin said, “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 Chinese have begun using this route for faster access to European markets.  China has been using all available options in its arsenal to reach the markets fast.  With the increasing use of Northern sea route by china and Russia, western shippers have begun to given serious look to the proposal.

The Cape of Good Hope

Courtesy: Dreamstime.com

It was the route preferred by the Europeans when in 1453 Constantinople fell.  The first recorded transit is by Vascoda Gama.  Since then it had been put to use.  But it is circuitous route compared to Suez Canal and stretches the distance by 3500 kms.  However, the route cost is cheaper than Suez Canal and many liners started using it during the height of lock down during Covid.  Of course, the Suez Canal authority slashed prices in response to the lower transit fee charged by the Cape of Good Hope.

Conclusion 

While the alternative sea routes have been in existence since time immemorial, the real change has now come in the form of Rail route namely Steel Camel.  Will it be a real alternative, perhaps yes or no.  But the World is set to witness dramatic shift in transit routes. And that is for sure!

R R Padmanabhan

Director - Exim Academy