Risk Management of Global Sea Trade Routes

BIT's 1st Annual World Congress of Ocean September 20 - 23, 2012 in Dalian Risk Management of Global Sea Trade Routes Salma Zaki Abd Elfattah Economic Analyst, Maritime Research and Consultation Center Arab Academy for Science and Technology & Maritime Transport, Egypt Introduction: Maritime transport handles over 80% of the volume of global trade and accounts for over 70% of its value. Since 1970, global seaborne trade has expanded on average by 3.1% every year, reaching an estimated 8.4 billion tons in 2010. At this pace, and assuming no major upheaval in the world economy, global seaborne trade is expected to increase by 36% in 2020 and to double by 2033. While bulk trade accounts for the largest share of global seaborne trade by volume, the containerized cargo contribution grew more than threefold between 1985 and 2010 world container port throughput increased by an estimated 12.6%, to 528.8 million twenty-foot equivalent units (TEUs) in 20101. Global Sea routes are considered a good representation of global trade flows, since shipping is a derived demand of trade exchange between different geographic locations2. This exchange reached in terms of value $295 trillion, the top five traded commodities are; petroleum and petroleum products, electrical machinery, apparatus and appliances, machinery, other than electric, transport equipment, and other commodities. The distribution of major and secondary trading centers reveals the implied trade routes that support flows between such centers. As Figure (1) reveals the most important trade centers are west Europe, East Asia, and North America, while the secondary important are the Mediterranean, and the Arabian Gulf. However the Arabian Gulf has gained extra weight of importance due to its role as the biggest oil producer in the world. 1 2 World Economic Situation and Prospects 2012, IMF. Elements of port operations and managements, Alan E.Branch, London, 1986. Salma Zaki-Maritime Research and Consultation Center- Arab Academy for Sciences and Technology & Maritime Transport. BIT's 1st Annual World Congress of Ocean September 20 - 23, 2012 in Dalian Figure (1): above global exporters, below global importers for all commodities Source: http://comtrade.un.org/27-8-2012. Sea routes can be defined as being various paths used by ships as they cross the seas between trading areas from the port of loading to the port of discharging Due to operational concerns, the need for shorter distances with a suitable speed to maintain efficient fuel costs forces shipping companies to manage their operations as efficiently as possible3. Port and route selection criteria are related to the entire network in which the port is just one node. The ports that are being chosen are those that will help to minimize the sum of sea, port and inland costs, including inventory and quality considerations of shippers. Port choice becomes more a function of the overall network cost and performance. The logistics providers and transport operators have designed more complex networks that need a high level of reliability. The current development and expansion of global 3 Maritime Transport Systems In The North-South Pacific Bound Routes Through Indonesia Saut Gurning1, Stephen Cahoon2, 9th International Conference , Research And Development In Mechanical Industry, Radmi 2009 ,Serbia Salma Zaki-Maritime Research and Consultation Center- Arab Academy for Sciences and Technology & Maritime Transport. BIT's 1st Annual World Congress of Ocean September 20 - 23, 2012 in Dalian supply chains and the associated intermodal transport systems relies on the synchronization of different geographical scales4. Main routes: Two indices have been used to determine main sea routes; the first is the traffic level in different sea routes which reflect the vital role of each route, the other is the Betweenness centrality measure of a port in a network, that equal to the number of the shortest paths from all vertices to all others that pass through that node. Deployment of ships is an indicator of trade flows on specific routes. “East–West” routes which links through major transshipment centers that are located at the respective geographical corners; in Africa, these are mostly ports in Morocco, Egypt and South Africa, while for South American countries the major transshipment centers are located in Panama (Central America) and in MERCOSUR, where the ports of Buenos Aires, Montevideo, Santos and Rio de Janeiro cater for most of the trade generated on the east coast5. Figure (2): liner services over sea routes 2010 Source: http://www.worldshipping.org/about-the-industry/global-trade/trade-routes 4 Models to Predict the Economic Development Impact of Transportation Projects: Historical Experience and New Applications Glen Weisbrod, Economic Development Research Group, Inc This EDR Group working paper was subsequently published in Annals of Regional Science, December 2007 5 UNCTAD Newsletter Africa 2009 Salma Zaki-Maritime Research and Consultation Center- Arab Academy for Sciences and Technology & Maritime Transport. BIT's 1st Annual World Congress of Ocean September 20 - 23, 2012 in Dalian The chart reveals that at least 30% of the services pass the Mediterranean, while 47% reaching for the Far East, and about 24% heading to North America which is compatible with the trade flows. Nautical distances take into account intermediate ports of call along a route. The Europe-Far East trade became the most important trade route from the mid 1990s. The China factor has its full effect on liner shipping and has reoriented the focus of many container ports towards the East. This has led to a balance shift from the Atlantic Rim to Suez route to Asia. This shift has opened windows of opportunity for the Med to play a more important role in accommodating international trade flows. Container vessels moving on the Mediterranean Sea are classified by maritime route such as Europe-Far East, East Mediterranean-Far East, and West Mediterranean-Far East. Vessel traffic along sea routes shows the relevant importance of the individual routes6. Figure7 (3): the trajectories of all cargo ships bigger than 10000 GT (2007) According to Kaluza et al., and Based on Figure (3) the main trunk route can be identified by following the yellow line. From the prospective of global containerization; the spatial design of maritime transport not only follows trade demand but also possesses its own practical arrangements and network configurations, which also evolve over time. The concentration and regional 6 The Study Of Master Plan And Rehabilitation Of Greater Alexandria Port In Arab Republic Of Egypt, JICA, 1999. The Complex Network Of Global Cargo Ship Movements, Pablo Kaluza, Andrea Ko¨Lzsch, Michael T. Gastner, This Journal Is © 2010 The Royal Society. 7 Salma Zaki-Maritime Research and Consultation Center- Arab Academy for Sciences and Technology & Maritime Transport. BIT's 1st Annual World Congress of Ocean September 20 - 23, 2012 in Dalian polarization of flows by load centers and intermediate hubs toward other secondary ports are typical examples of such configurations8. Figure7 (4): visualization of global liner shipping network in 1996 and 2006 As it shown in Figure (4) the main points in global sea routes network are Suez Canal, Singapore, Rotterdam, Hamburg, and Hong Kong. They might replace each other's ranks over time, but they are all existed on the same path. Hence, the main maritime route is the international trunk route that connects Europe, Asia and East North America via Suez Canal passing through Arabian Gulf. 8 The Worldwide Maritime Network Of Container Shipping:Spatial Structure And Regional Dynamics, César UCRUET Theo NOTTEBOOM, Global Networks 12, 3 (2012) 395-423. Salma Zaki-Maritime Research and Consultation Center- Arab Academy for Sciences and Technology & Maritime Transport. BIT's 1st Annual World Congress of Ocean September 20 - 23, 2012 in Dalian The risks: Risk management, will normally entail reducing the chances of the downside risk; it may also reduce the size of the more adverse effects. The identification of specific risks according to past incidences of loss can be an effective form of risk management in many circumstances9. A successful risk management in the context of maritime traffic activity with geographic information, environmental conditions, local economies and levels of security at ports is a prerequisite for the implementation of sea transport.10 In the case of main maritime shipping route, the ultimate risk is everything and anything that might cause a stoppage of trade flows over that route. In this paper three main elements shall be examined; trigger events, potentials, severity of the consequences. For all shipping routes, the uninterrupted flows of traffic through the Straits constitutes an element of significant importance to the economies of the countries which are served thereby and which would, if disrupted, have an equally significant impact on international trade and global economy as a whole. If for some reason the Straits were closed, nearly half of the world’s fleet would be required to sail some 560 miles further resulting in the prolongation of voyage times and generating a substantial increase in the requirement for vessel capacity. In fact, some sources have claimed that all excess capacity might be absorbed, with the effects being strongest for crude oil shipments and dry bulk cargoes such as coal. Closure of the Straits could be expected to immediately raise freight rates worldwide11. Hence, the weakest points of world sea routes are the chock points which constitute bottlenecks and rare assets of limited supply; the following map demonstrates the main chokepoints along the international trunk route. 9 Impact of Transport Infrastructure Investment on Regional Development, organization for economic co-operation and development, 2002, France. 10 Integrating Networks between Ports, Logistics Centers and Other Operators, Baltic Institute Rostock (coordination) CMS Turku, VGTU Vilnius, FDT Aalborg, 2006. 11 International Maritime Organization, C 93/15, 7 October 2004. Salma Zaki-Maritime Research and Consultation Center- Arab Academy for Sciences and Technology & Maritime Transport. BIT's 1st Annual World Congress of Ocean September 20 - 23, 2012 in Dalian Figure (5): the main trunk route and its bottlenecks Source: http://people.hofstra.edu/geotrans/eng/ch3en/conc3en/main_maritime_shipping_routes.html Three main points have been determined as a possible stopper of trade flows along the international trunk route. They have been defined according to their importance, potential of their blockades, and the expected effects of their partial or total blockage. They are; Suez Canal, Strait of Hormuz, Strait of Malacca. Suez Canal: Transiting goods traffic through the canal showed an increase of 45.7 million tons (7.1 %) from 646.1 million tons in 2010 to 691.8 million tons in 2011. This volume represents 8% of the world seaborne trade. Suez Canal share of facilitating movements of world containerized cargo reached 27% with volume of 367 million tons, and its share of crude oil and products reached 3% of the total flows in 201012. 12 Compiled by the author from UNCTAD report; Review of maritime transport, and Suez Canal statistics, 2011. Salma Zaki-Maritime Research and Consultation Center- Arab Academy for Sciences and Technology & Maritime Transport. BIT's 1st Annual World Congress of Ocean September 20 - 23, 2012 in Dalian Figure (6): a: the proportional weight of South Canal region's seaborne trade 2011, b: the proportional weight of North Canal regions' seaborne trade 2011 Source: http://suezcanal.gov.eg/ Figure (6) shows the markets which Suez Canal facilitates their trade. It's shown that for the regions north the canal; Europe and the Mediterranean are the most affected regions, while for the regions south the canal; Asia, Arabian Gulf, and red sea are the most affected regions by the services provided by Suez Canal authority. Hence, a partial or total blockade in the canal will hardly harms trade areas such; America, and Salma Zaki-Maritime Research and Consultation Center- Arab Academy for Sciences and Technology & Maritime Transport. BIT's 1st Annual World Congress of Ocean September 20 - 23, 2012 in Dalian Baltic Sea, meanwhile it could have significant adverse effects upon Europe and Asia trades and economies, it also affects the community of global liner shipping since it shared almost third of the total containerized cargo in the world. Reviewing the mere facts of recent history, one event can be recognized as a trigger event that had led directly to the risk of total blockade, which is; any act that implies diminishing of Egypt sovereignty over the canal, although this is hardly a probability in a civilized world that is assumed to be the world we live in today. On the other hand, The Strait of Bab el-Mandab is a strategic link between the Indian Ocean and the Red Sea. It can hinder the traffic inward and outward Suez Canal. A closing of this strait would have serious consequences, forcing a detour around the Cape of Good Hope in a process demanding additional tanker space13. The piracy activity in Gulf of Aden can lead to partial blockade of Suez Canal; since it increases the cost of navigation through Canal to destinations, or from origins south Bab elmandab. According to ICC International Maritime Bureau Pirates in Somalia & Gulf of Aden accounted for 22% of all piracy attempted and actual attacks in the world in 201014. In order to provide security of such location and similar areas, some measures have been taken at the global, regional, sub-regional and bilateral levels to combat piracy in accordance with international law, this includes15;    Arresting, investigating, and prosecuting persons who have committed piracy or are reasonably suspected of committing piracy. Seizing pirate ships and/or aircraft and the property on board such ships and/or aircraft. Rescuing ships, persons, and property subject to piracy. All vessels transiting the area are advised to take additional precautionary measures and maintain strict 24 hours visual and radar anti piracy watch using all available means. Watch keeping crews should lookout for small suspicious boats converging to own vessel. Early sightings/detection and accurate assessment will allow Masters to increase speed and take evasive maneuvers to escape from the pirates and at the same 13 Straits, Passages And Chokepoints: A Maritime Geostrategy Of Petroleum Distribution Jean-Paul Rodrigue, (Revised November 2004) In Press Les Cahiers De Geographie Du Quebec, Special Issue On Maritime Strategic Passages 14 ICC-IMB Piracy and Armed Robbery Against Ships Report 01 January – 30 June 2011. 15 international maritime organization, c 102/14 3 april 2009 Salma Zaki-Maritime Research and Consultation Center- Arab Academy for Sciences and Technology & Maritime Transport. BIT's 1st Annual World Congress of Ocean September 20 - 23, 2012 in Dalian time request for assistance from various Authorities/Agencies. Monitor and keep clear of all small boats if possible16. However, the IMO cannot approve measures that do not have the support of the state(s) involved, which can limit its power to reach consensus amongst the majority of the international community at times. This is because the International Maritime Organization cannot infringe on the sovereignty of any states. The applicable state(s) must voluntarily accept the measure before it can be approved. One of the primary reasons why there is so much piracy in these regions is due to the desperation of the impoverished people living there. Many believe that solving this issue does not begin out at sea, but on shore in the countries themselves. The establishment of naval bases by other states in these troubled areas is one possible solution in theory17; however, in practice naval bases would be very expensive to establish and this strategy still leads to another problem which is requiring the full trust of good intentions of the international bodies involved. In addition, it does not address the root causes that lead to piracy. Malacca strait: Malacca strait Together with the Singapore Strait form the main seaway connecting the Indian Ocean with the South China Sea and provides the shortest route for tankers trading between the Middle East and Far East Asian countries16 The Strait of Malacca is the longest strait in the world used for international navigation, approximately 520 nautical miles long. Most of it runs through the territorial waters of Indonesia, Malaysia and Thailand with the much shorter, narrower and navigationally complex, Singapore Strait joining it at the southern end. Depths within the Straits of Malacca and Singapore (the Straits) are irregular with many areas of sand waves on the seabed. In the main shipping channel the depths vary from over 73 meters to less than 10 meters. A through route of 23 meters depth has been identified. Transiting traffic through the region is considerably heavy, reported to be approximately 60,000 vessels a year. In addition, there are a considerable number of local vessels engaged in trade across the Straits and numerous fishing vessels which 16 17 http://www.icc-ccs.org/ Ensuring the Safety of International Shipping Lanes By Casey Gallagher Western Oregon University, 2012. Salma Zaki-Maritime Research and Consultation Center- Arab Academy for Sciences and Technology & Maritime Transport. 1 BIT's 1st Annual World Congress of Ocean September 20 - 23, 2012 in Dalian can be encountered in most areas. More than half of the world’s annual merchant fleet tonnage passes through the Straits of Malacca, Sunda and Lombok16. The narrowest point of this shipping lane is 1.2 miles wide near Batu Berhanti, in the Singapore Strait; this creates a natural bottleneck, with the potential for collisions and/or groundings which may result in pollution of the marine environment. The strait had suffered from piracy and numerous maritime incidents years ago, however, the close cooperation and the nature of integration that prevail in the relations amongst the four countries controlling the strait overcame the potential of partial blockage threats. However, a dispute between these parties can lead to deterioration in the safety and security measures in the area. A blocked of Malacca and Singapore strait would force shipping companies to choose alternative routes from Indian ocean to the East Asia region, ships would reroute around the Indonesian archipelago through the Lombok Strait. Most ships transiting the Lombok Strait also pass through the Makassar Strait. The Lombok Strait is located between the islands of Bali and Lombok, while the Makassar Strait lies between the islands of Borneo and Sulawesi in Indonesia. For supertankers, this route is safer than the Strait of Malacca because it is wider, deeper, and less congested. The Sunda Strait connects the Java Sea to the Indian Ocean. Because the strait is very narrow and shallow at certain points, it is difficult to navigate. The Sunda Strait’s strong tidal flows, man-made obstructions, volcano, and tiny islands also contribute to the Lombok Strait’s status as the more preferable alternative. Avoiding the territorial waters of Indonesia entirely would be much costlier. If prevented from transiting through the Indonesian Archipelago and the Malacca Straits, an oil tanker headed from the Arabian Gulf to Japan would have to reroute around Australia. This may place the burden of additional costs on shippers, and it may have adverse effect on regional and national economies, a blockade in these straits may create also a shortage of energy sources – including crude oil and liquefied natural gas, it might also lead to geopolitical risk, in light of national and regional security in those regions18. 18 Proceeding of T- LOG 2010, Blockade risk of Strait of Malacca and Singapore, Yukuhiro Ogawa et al., Salma Zaki-Maritime Research and Consultation Center- Arab Academy for Sciences and Technology & Maritime Transport. BIT's 1st Annual World Congress of Ocean September 20 - 23, 2012 in Dalian Horumz strait: The Strait of Hormuz forms a strategic link between the oil fields of the Arabian Gulf also called Persian Gulf, the Gulf of Oman and the Indian Ocean. It has a width between 48 and 80 km, but navigation is limited to two 3 km wide channels, each exclusively used for inbound or outbound traffic. Oil flows through the Strait of Hormuz account for roughly 40% of all world traded oil, and the 17 MBD19 or more of oil, that normally are shipped through the Strait of Hormuz. About 71% of that oil goes eastwards to Asia (especially Japan, China, and India) and 21% westwards (via Suez Canal, Sumed pipeline) and the rest (8%) transported via cape of good hope to north & south America. Any closure of the Strait of Hormuz would require use of longer alternate routes. Such routes are now limited to the approximately 5-million-bbl/d capacity, East-West Pipeline across Saudi Arabia to the port of Yanbu, and the Abqaiq- Yanbu natural gas liquids line across Saudi Arabia to the Red Sea20. Figure (9)27: Oil Flows Circulation in and out of the Arabian Gulf is thus highly constrained, because the sizable amount of tanker traffic makes navigation difficult along the narrow channels. In addition, islands that insure the control of the strait are contested by Iran and the United Arab Emirates. The security of the strait has been often compromised by the political games which intensity is used to be escalated from time to time. 19 http://www.statista.com/statistics/216933/key-figures-for-the-strait-of-hormuz/(14-09-2012) Center for strategic and international studies, arleigh a. Burke chair in strategy, iran, oil, and the strait of hormuz, anthony h. Cordesman, arleigh a. Burke chair in strategy march 26, 2007. 20 Salma Zaki-Maritime Research and Consultation Center- Arab Academy for Sciences and Technology & Maritime Transport. BIT's 1st Annual World Congress of Ocean September 20 - 23, 2012 in Dalian The real threat and the potential trigger event in the case of Hormuz strait are to lose control and violate game rules. The most serious dispute over the Strait of Hormuz was the “Tanker War” from 1983–1988. In total, Iran attacked 554 oil tankers, which resulted in the deaths of 400 mariners. There was a 25% reduction in tanker traffic through the Gulf at the worst point in the fighting. This occurred even though less than 2% of ships passing through the Arabian Gulf were disrupted. During the past several years, Iran also has stated that it would respond to a Western attack by closing off the flow of oil through the Strait of Hormuz. The only other significant outlet for Arabian Gulf oil is the pipelines21, which service mainly flows to the western world. Any blockage of Hormuz strait shall cause significant negative impacts upon Asian Economies and its development plans. For example China's crude oil imports have grown robustly in the past several years, and reached a record-high 6 million bbl/d by May 2012. China imported nearly 5.1 million bbl/d of crude oil on average in 2011, rising 6% from 4.8 million bbl/d in 2010. In the first half of 2012, imports rose even higher to 5.6 million bbl/d. Crude imports now outweigh domestic supply, consisting of over half of total oil consumption in 2011.22 The other main problem is that a blockage in Hormuz means suffocation to all ports inside the Arabian Gulf that will affect negatively liner shipping used to call at port of Jabel Ali, and the consuming markets in GCC Area and their goods providers from developed countries since GCC enjoys one of richest in the world. Alternative routes: To avoid passing through the previous choke points there are three considerable alternatives; Trans-Siberian Route, Polar Route, and the traditional route of Cape of Good Hope. 21 Straits, Passages And Chokepoints: A Maritime Geostrategy Of Petroleum Distribution Jean-Paul Rodrigue (Revised November 2004) In Press Les Cahiers De Geographie Du Quebec, Special Issue On Maritime Strategic Passages 22 http://www.eia.gov/countries/cab.cfm?fips=CH (14-09-2012). Salma Zaki-Maritime Research and Consultation Center- Arab Academy for Sciences and Technology & Maritime Transport. BIT's 1st Annual World Congress of Ocean September 20 - 23, 2012 in Dalian Trans-Siberian route Figure (7): Trans-Siberian Route. Source: http://transsiberian.info/map.htm Is the largest railway in the world, which runs for 5,867 miles and connects Far East with Western Europe23. The TSR is a key link connecting the transportation systems of the Far East and of the Asian/Pacific Region with the transportation system of Europe; it has capacities to transport up to 130 million tons cargo per year, including about 500.000 – 600.000 containers with import/export cargo and 250.000 – 300.000 transit containers.24 Though the Trans-Siberian route would appear to be physically possible alternative for Europe – Asia trade, the time and costs of this journey is considerably high. since the rate of shipping via TSR is non competitive, if it is compared to the freight rates of the deep-sea shipping companies. This is because the Trans-Siberian route is less developed and is subject to more customs as well as schedule delays and inflexibility. For instance, a reservation on the train carriage requires one month’s advance notice while that for the sea route requires only 7 to 10 days of notice.25 Another disadvantage is lack of capacity for transit cargo, since it represented only 6% of the total capacity which has been exceeded by 3.4% in 2007. 23 European Transport \ Trasporti Europei N. 29 (2005): 46-56 The Transsiberian Rail Corridor: Present Situation And Future Prospects, Boris E. Lukov, PROMIT Seminar: Connecting Europe And Asia With Transsiberian Rail 25 Mongolia: Trade Facilitation And Logistics Development Strategy Report - Final Report, 2006, Asian Development Bank, 24 Salma Zaki-Maritime Research and Consultation Center- Arab Academy for Sciences and Technology & Maritime Transport. BIT's 1st Annual World Congress of Ocean September 20 - 23, 2012 in Dalian Polar Route: Figure (8): Polar Route Using Polar route can provide a significant reduction in fuel consumption and transportation time – and it also means much lower CO2 emissions. The fuel savings alone add up to approximately $180,000. As climate change melts Arctic ice the possibilities of using the Northern Sea Route linking Europe and Asia around the coast of northern Russia are being considered. This is due to the large savings in voyage in terms of distance and time, that can potentially be achieved, and it also eliminates risks of piracy when taking the traditional route. In practice there are still severe limitations because the route is only usable at most for a few weeks each year, there are draught limitations and added costs of icebreaker support and associated bureaucracy to gain authority to use the route, so that the economic benefits remain questionable for more than individual voyages. However, the economic and other advantages and disadvantages are not clear cut. Fuel cost and time savings must be balanced against the additional costs of using icebreakers, other planning and training needs and gaining permits. There are also risks to be considered from operating vessels in such environmentally sensitive waters with challenging conditions. This means that only ships rated to the highest ice classes are able to transit. Building ships to these standards carries a new builds premium from the additional steel requirement. Thus, while there may be an increasing number of individual voyages using this route, especially if the period when conditions are Salma Zaki-Maritime Research and Consultation Center- Arab Academy for Sciences and Technology & Maritime Transport. BIT's 1st Annual World Congress of Ocean September 20 - 23, 2012 in Dalian suitable increases with global warming, the prospect of regular services is still some way off26. From other perspective the process of concentration in liner shipping, ports need to foster containerization by investing in gantry cranes, and ports that lie on the same route need to cooperate to create common conditions for the carriers and thus avoid bottlenecks27, which is not available along the polar route. Another main concern regarding increased shipping activities in the Arctic is the accidental spill of oil and chemicals. Oil spills, resulting from shipping accidents, occur regularly worldwide (e.g. Prestige, Heibei Spirit, and Full City). Considering the added challenges of Arctic operations, the risk of accidents may increase in these waters. Presently, there are very few ways for recovering spilled oil from ice covered waters28. In view of reducing the risk of major disruptions, logistics players tend to opt for a flexible network design29 which can offer various targets to serve and call. This leads to extra costs to find alternative routes. Cape of Good Hope route: Routing via Cape of Good Hope may be a viable option for lower value cargoes, such as some bulk commodities. However, for high value consumer goods or items needed for just-in-time manufacturing, the added delay may be unacceptable to the shipper. For example, routing a tanker from Saudi Arabia to the United States via the Cape of Good Hope adds approximately 2,700 miles to the voyage. This longer distance will increase the annual operating cost of the vessel by reducing the delivery capacity for the ship from about six round-trip voyages to five voyages, or a drop of about 26%. The additional fuel cost of traveling via the Cape of Good Hope is about $3.5 million annually. The cost of avoiding risk becomes more complex in the liner trades. A longer route change would result in the need for an additional vessel in order to maintain the scheduled service and capacity commitments of the liner operation. For example, a 26 Shipping Economist, Lloyd's, Sep. 2011 concentration in liner shipping its causes and impacts for ports and shipping services in developing regions, united nations economic commission for latin america and the caribbean – eclac, 20 May 1998. 27 28 Shipping across the Arctic Ocean, A feasible option in 2030-2050 as a result of global warming? Research and Innovation, Position Paper 04 – 2010, DNV 29 Economic analysis of the European seaport system Report serving as input for the Discussion on the TEN-T policy, Report prepared by Prof. Dr. Theo Notteboom ITMMA – University of Antwerp, 2009 Salma Zaki-Maritime Research and Consultation Center- Arab Academy for Sciences and Technology & Maritime Transport. BIT's 1st Annual World Congress of Ocean September 20 - 23, 2012 in Dalian routing from Europe to the Far East via the Cape of Good Hope, rather than through Suez Canal, would incur an estimated additional $89 million annually, which includes $74.4 million in fuel and $14.6 million in charter expenses. In addition, the rerouting would increase transit times by about 5.7 days per ship. This would result in the need for additional vessels to maintain the service frequency. However, these costs do not consider the disruption in the logistics chains30. Discussion: The blockage of any or all of these chock points shall reflect adverse effects upon the old world's countries and economies more than those upon the new world countries and economies. All of the three alternatives cannot represent long run economic solutions, since the first two are not technically reliable, and the third will impose higher transporting, logistic, and environmental cost to the final consumer. While these alternatives can partially overcome Suez Canal and Malacca Strait blockages, they cannot mitigate the blockage of Hormuz. Recognizing that sea routes follows trade routes demonstrates that the importance is not related to chock points themselves as it is related to geographic locations they are existed in. this remarks is confirmed by following trade routes in ancient and medieval centuries31. The proposed alternative is to reestablish the main trunk sea route via a complex Multimodal Transportation network; connecting the planned renovated Alexandria port to Safaga port via high speed railway to transport cargo to Red Sea ports by train ferries ships, and a high way connecting Saudi Arabia to Egypt. For Saudi Arabia connecting its Gulf ports to its Red Ports is a precaution measure to mitigate blockage of Hormouz. Connecting all of GCC countries by a network of railway, highways, pipelines that extended to Salalah Port in Oman helps the region to preserve economic and logistic cost for its imports and exports and for its main trading partner. As much as, this solution seems costly in terms of money and efforts in the short run, As much as it enhances safety, provides strengths to the middle east regions and to the global economy, raises bars of international collaboration between nations in the long run. 30 http://www.marad.dot.gov/documents/HOA_Economic%20Impact%20of%20Piracy.pdf 31 World Civilizations The Global Experience, Volume 2., Peter N. Stearns, Michael Adas, Stuart B. Schwartz, Marc Jason Gilbert, Longman publishing 6 edition., 2011. Salma Zaki-Maritime Research and Consultation Center- Arab Academy for Sciences and Technology & Maritime Transport. BIT's 1st Annual World Congress of Ocean September 20 - 23, 2012 in Dalian Another critical measure that has to be taken seriously which is to reestablish the governmental, economic, national rule of Somalia; since it has proven in such cases that influencing instability32 in a region shall be reversed negatively upon the others. This can be done by physical, technical, financial support of Arab countries and the positive influence of foreign countries which have a clean record of mutual cooperation. Conclusion: The main sea routes are those routes which serve trade flows and commodities distribution throughout the globe. From which a trunk route that connects East West flows suffers from a probable risk of partial or total blockage, that its adverse effects impact mainly the old world, where alternatives are not efficient enough due to technical or economic reason. Hence, recreate the main sea trunk route by multimodal transport network is an effective solution to overcome chock points while maintain and strength the advantages of locations. Limitations: This paper is concerned mainly in discussing the physical risks that could lead to total or partial stoppage of the majority of seaborne trade flows, it did not address environmental issues, financial risks, human factor, or natural disaster. Further research is required to assess these important risks and their effects upon sea routes. Feasibility studies should be examined to decide the suitability of proposed alternative introduced in this paper. 32 http://www.hrw.org/news/2008/12/29/us-role-somalias-calamity (14-02-2012) Salma Zaki-Maritime Research and Consultation Center- Arab Academy for Sciences and Technology & Maritime Transport. BIT's 1st Annual World Congress of Ocean September 20 - 23, 2012 in Dalian Salma Zaki-Maritime Research and Consultation Center- Arab Academy for Sciences and Technology & Maritime Transport.