Maritime trade at the crossroads: the future of the supply chain

On the other hand, the conflicts in Ukraine and, above all, in Gaza, have completely disrupted maritime navigation in the northern hemisphere, especially between Asia and Europe (not to mention the problems of the Panama Canal as a result of persistent drought).

The vast majority of the container, car carrier and, to a lesser extent, bulk fleet have been using the Cape of Good Hope route for more than eight months now instead of the shorter Red Sea route, to connect Europe and Asia, and thus avoid the Houthi attacks on merchant shipping in the Red Sea in solidarity with the attacks on the Palestinians in Gaza.

On the other side of the planet, taking advantage of the intensification of climate change, Russia and China are strengthening collaboration and increasing investment in ports, ships, cartography and security systems with the aim of turning the Arctic Route into a navigable waterway for a few months of the year similar to those of the rest of the world's oceans.

This September, a container ship with a capacity of almost 5,000 TEU travelled the Northeast route, the largest ever to do so. It is no longer only tankers and bulk carriers that sail the once glacial Arctic waters. They are now, albeit still in embryonic form, container ships carrying consumer goods of all kinds.

Where is the globalized world heading?

The coming months will be key in determining where this globalized world, which at the beginning of the century seemed to be heading towards ever more intense integration, is headed. China's entry into the WTO in 2001 implied that more than 90% of humanity accepted the same rules of international economic relations based on a collective will to move towards ever-greater liberalization of international trade.

At the time, no one doubted that the best way to reduce poverty in the world was to promote global trade. Today, Europe and the United States no longer seem so convinced of this, or simply have other priorities.

Maritime transport was one of the main factors that made this dream come true, thanks to its extremely high reliability, the extraordinary growth of its dimensions and the containment and reduction of the cost of maritime transport to the point of making it almost insignificant for many sectors.

Since China's entry into the WTO in 2001 alone, the size of container ships has increased almost threefold. From ships with a capacity of 9,000 TEU to today's 24,000+ TEU vessels. The increase in size had kept shipping costs low until, almost five years ago, a seemingly endless chain of disruptions broke out.

This was also when the well-known reliability of shipping, especially containerized shipping, began to decline significantly.

The world, two decades later, is at an unforeseen crossroads and the next few months will be decisive to see where globalization, international trade and thus shipping are headed.

Harris, Trump and tariffs

The US elections in early November do not seem likely to change the scenario too much. The two candidates, Kamala Harris and Donald Trump, seem determined to continue on the path initiated during Trump's first term of imposing tariffs on third country production, especially China. However, should the latter win, he will probably be more aggressive in some measures and, most certainly, in the rhetoric that accompanies them.

The evolution of the conflicts in the Middle East and Ukraine, whatever happens in the coming months or years (worsening, escalation, ceasefire or armistice), does not seem likely to alter the path towards a certain fragmentation of globalization.

The maritime industry faces a major challenge if it does not want to continue contributing to the fragmentation of globalization we are witnessing and kill the goose that laid the golden eggs that has fueled its growth and made it one of the pillars of the world economy.

It should contribute as far as possible to maintaining sustainable levels of reliability, prices and healthy competition and help international supply chains regain the competitiveness that characterized them from the late 1980s until the end of the Covid-19 pandemic.

The winners of the decoupling between the West and China

However, the issue of the fragmentation of globalization must be given its due weight. This is still very embryonic and the port statistics of the world's major ports indicate this.

If we look at the origin and destination of the main volumes of international trade and maritime traffic (especially containers) they handle, intra-Asian and Asian (especially China) exchanges with the USA and the EU are still the predominant ones.

If we look at other maritime traffic segments such as cars, Asian dominance is also beginning to be overwhelming after the incorporation of Chinese brands into the foreign sector, trailing behind Japanese and Korean brands and leading the electric segment.

As we pointed out at the beginning, so far, the major beneficiaries of the timid decoupling between Western economies and China are Southeast Asian countries (Vietnam, India, Thailand, Myanmar, Indonesia), Korea, Turkey, Morocco and Mexico, to name a few.