By Brian Dunn
With developing countries becoming major players in international trade, we are witnessing the re-emergence of trade routes that have been dormant for years, reshaping world trade patterns, according to David Collenette, Chairman of the Board, Chartered Institute of Logistics and Transport (North America) and former federal Minister of Transport.
“Shipping is the backbone of international trade, and global merchandise trade is growing faster than global GDP, and developing countries account for 60 per cent of that growth,” he told a roundtable at the International Economic Forum of the Americas on June 10 in Montreal. “The admission of China to the WTO (World Trade Organization) was the single most major development in recent years. China is developing ties with other developing countries like India and Indonesia which are also becoming major players,” he said during the session entitled, New Trade Patterns: The Implications for Maritime Transport.
“China is also seeking new areas to invest in which are not necessarily Europe or North America,” he added. “China’s maritime links now include Africa and Latin America, and China is now Brazil’s largest trading partner.“
The rise of emerging economies is reshaping global business and the demand for natural resources, and Canada has an interest in shipping its natural resources to these areas, particularly value added commodities such as liquefied natural gas, Mr. Collenette noted.
In order to compete with the “Silk Road” trade route linking China with India, parts of Africa and Europe, there is a proposal to build a new canal through Nicaragua which doesn’t make sense, said Mr. Collenette, as it would compete with the Panama Canal. It would be far more practical to expand the Panama Canal to make it easier for Asian goods to reach North America.
“The potential of an Arctic passage is exciting, but fraught with danger. The Northwest Passage is unchartered and we have limited icebreaking capacity in Canada which has to be addressed by the Canadian government. Clearly, the Russians have an advantage. The 19th century belonged to Britain, the 20th century to the U.S. and the 21st century is China’s century. The issue of maritime security is important. The solution is to cooperate to ensure maritime lanes work for everyone’s benefit.”
What we are witnessing in the Arctic is a fast moving change of the planet, said ólafur Ragnar Grímsson, President of the Republic of Iceland. A Cosco container ship travelling between Shanghai and Rotterdam saved 10 days by travelling the The Northern Sea Route. But all Arctic harbours are too small to accommodate the largest container ships, which is good news for Iceland which can.
As a global shipper and shipbuilder, even South Korea is becoming involved through its participation in the Arctic Council and is building ice-reinforced vessels, Mr. Grímsson noted. “Singapore appointed an Ambassador to the Arctic with the primary purpose of pushing Singapore’s strategy in Arctic discussions. They want to invest in the Arctic to replace potentially lost traffic at home.”
In August there will be a meeting in Alaska of the Arctic Circle organization to examine the need for planning Arctic harbours and sea routes. “This illustrates that what was an obscure subject 10 years ago is now a major topic of interest. The Chinese are particularly interested in a Centre Route across the pole,” said Mr. Grímsson. “There is increased cooperation between Russia and China and they could coordinate their Arctic activities.”
If routes are open for just three months, there could be a tendency to bring in more traffic to the area, said the Icelandic president. “Some shipping companies like Maersk don’t believe they will become major players in the Arctic, but my country will be a participant.”
During questions following the session, Mr. Grímsson said one aspect of Arctic shipping rarely discussed is the increase of cruise ship traffic, particularly from Asian countries. “It’s an accident waiting to happen with 2,000-3,000 passengers on each cruise and it is becoming the fastest-growing part of international cruises. They should be subject to the same standards as other ships.”
Any implementation of regulations would have to be through the International Maritime Organization, suggested Mr. Collenette, similar to ICAO which regulates the airline industry. “You need that kind of model to tackle problems on the water.”