2020 has been an exceptional year on many fronts, including international shipping routes. Following a first semester of deadlock, China has dominated global exchanges in the second half of 2020. Hence, the lockdowns in several European countries during this period has increased foreign demand for Chinese goods, including electronic devices and house appliances. This trend has allowed China to overcome the US as the leading trade partner of the EU, in terms of goods, with a 6% increase (equal to 384 billion euros) of total Chinese export (data from Eurostat).
In the same period, however, international shipping was suffering a catastrophic shock: in addition to the old issue of long transit times (that, during the pandemic, has been more problematic the usual), lack of containers, due to blank-shipping practices (reduction or cancellation of shipping), has increased cost of freight rates to record levels. According to Trasporto Europa, Shanghai Containerized Freight Index has recorded a 300% increase during the year for spot freight rates between Asia and Northern Europe, reaching an absolute level of 4091 dollars per Twenty-foot equivalent Unit (TEU). Freight rates for routes between Asia and the Mediterranean have recorded a lower increase (266%). Yet, they have reached the highest value: 4286 dollars per TEU.
Land routes’ growing importance
Chinese producers have attempted to bypass shipping delays by using land routes through Russia and Central Asia in such a context. According to official data by state media during 2020, the total number of train journeys has increased by 50%, a sevenfold rise from 2016. In 2021, the situation has not changed. Instead, this trend has accelerated: more than 2.000 freight trains have travelled from China to Europe during the first two months of the year, doubling the previous year's growth rate.
While train transports represent only a tiny fraction of total trade volumes, the Suez Canal's recent blockade continues an accident that worsens an already grim scenario in terms of international shipping. A context so problematic that has produced a boom in land transports between East and West. Train transports have been facilitated, unsurprisingly, by the Belt and Road Initiative. Rail transport infrastructures that initially have been used only thanks to Beijing's subsidies to cover rail freight costs (otherwise too expensive compared to maritime shipping), have shown to be a valid alternative in these months. Some provinces have recently invested in specific transport equipment to move goods that have been requested during the lockdown periods. In February, a Jiangxi Province train has been loaded with 50 wagons of washing machines and other house appliances and sent for a 15-day voyage to Moscow.
Even if the current situation is far from usual, several enterprises have already moved from sea to railways, and no reverse trend is in sight. The more so considering that the Suez accident and the 2020 experience have persuaded ship owners to avoid investing in an increase in cargo ships size. In fact, naval gigantism has raised questions about the industry’s choice for enormous vessels, whose size has quadrupled in the last 25 years. Only ship owners still consider them highly effective since they allow the exploitation of economies of scale. According to World Shipping Council, the largest ships can carry 24.000 20-foot containers and are twice and a half more energy-efficient than railways and seven times more than roads. Nonetheless, there is an internal debate within the industry whether those ships might have overcome the infrastructure necessary to support them.
The potential role of the Maritime Silk Road
Giant ships force shipping routes to centre on few huge ports and concentrate investment in only an exiguous number of strategic nodes. Since the 2013 launch of the Maritime Silk Road (MSR), one of the two "branches" of the Belt and Road Initiative (BRI), the interest in the development of China's port strategy has increased not only according to transport analysts but also according to sea strategy analysts at large. Such an Initiative includes developing specific transport corridors that involve three continents (Asia, Africa, and Europe) with both sea and land routes. Significant expectations have risen on the impact of the MSR on maritime transport between the Far East and Northern Europe through investments in harbours (first the Piraeus, then the offshore container terminal in Venice) and railways as alternatives (the train service linking Beijing with Hamburg). Those are initiatives that might have a substantial effect on the geography of international shipping. Even though commercial goals should not be evaluated separately from the strategic ones, several studies have already described Chinese terminals' expansion along the MSR. Since 2013, Chinese terminals have invested massively in ports along the MSR. The top three terminal operators globally are Chinese: Hutchison Ports (Hong Kong), COSCO Shipping Ports, and China Merchants. Although the internationalisation of Chinee terminal operators is a recent trend, their growth has been fast. Port cooperation is gradually becoming a crucial means of communication between China and the countries where ports are located. Countries along the MSR are highly diverse in terms of infrastructures, especially concerning port facilities and terminals. This feature is reflected in the gap between African/Asian countries and European ones, for example, Yemen and Syria in Western Asia and Sudan and Djibouti in Africa, where logistical port efficiency is generally low. This difference is attributable to inadequate national financial resources and the difficulty of directing significant investments on ports, which cause higher transport costs. Overall, the BRI, thanks to its massive mobilisation of financial and productive resources, is significantly increasing investment opportunities for Chinese operators in foreign terminals. Therefore, the building of terminals along the MSR is progressively attracting more attention from Chinese terminals operators.
The actual impact of the Maritime Silk Road
According to several scholars that applied complex network methods and GIS analysis to identify strategic port hubs and investment strategies along the MSR, in 2017, the ports with the greatest links to China were located in South-East Asia and Southern Europe. Albeit the connection between China and South-East Asia has strengthened, terminal operations in South-East Asia have not increased significantly in the last 12 years. Instead, foreign terminals where Chinese operators have invested are primarily located in Europe and the Mediterranean. The primary destinations of current and future investment from Chinese terminal operators are Singapore, Kelang, and Manila (Asia), Rotterdam and Hamburg (Europe), Suez and Port Said (the Mediterranean and the Red Sea), Brisbane, Melbourne, and Sydney (Australia). Therefore, MSR does not appear to have substantially altered the main shipping routes between Asia and Europe, nor those within the Mediterranean. The main route is still the so-called “horizontal” one, from Suez towards the heart of Europe, through Gibraltar towards the large European ports of the North. “Vertical” routes, unravelling from that one, are still minimal. The weight and importance of large ports, as well as of large shipping companies, are thus increasing. In this regard, the Suez “accident” (indeed, not an unlikely one considering the massive dimension of the ship, in both length and height) allows revaluating the theme of global shipping routes, as well as the rash judgment of the perspectives of land routes vis-à-vis sea ones.