The Ever Given, a 400-meter (1,300-foot) Golden-class container ship, one of the largest container ships in the world, got stranded in Egypt’s Suez Canal on last Tuesday and is having great implications on global trade between Asia and Europe. The ship is wedged diagonally across the span of the canal, blocking the waterway in both directions. The Suez Canal is one the world’s busiest trade routes. Coupled with the COVID-19 pandemic, the suspension of traffic through the narrow channel has deepened the problems for trade. Many ships, including oil tankers are now stranded at the either side of the canal, according to Refinitiv shipping data. Many of the ships have been rerouted, which are expected to take 10 to 15 additional days to reach the destination.
The incident brings up the importance of alternative to the Suez Canal. Two options have been presented by Russia and Iran and there is a third Chinese option.
Northern Sea Route
The Russians have pitched the Northern Sea Route (NSR) as an alternative. Ships have to travel shorter to reach China from Northern Europe to China and vice versa. The sea route is approximately 40% shorter than via the Suez Canal and 60% shorter via the Cape of Good Hope. However, the Northern Sea Route is contingent on ice conditions, but the proponents argue that the ice amount has reduced by 40% over the last 30 years. Russia is also working to make the NSR transportable round the year with a fleet of nuclear Icebreakers. NSR passes through the Russian northern shores across Arctic seas. NSR integrates European and Far Eastern ports of Russia and navigable river outlets into a single transport system. Its length is 5,600 km from the Kara Strait to Providence Bay. Starting 2021, Russia will begin building 16 emergency response and rescue vessels of different types for the route, which will be ready by 2023-2025. In 2018, 20.1 million tonnes were shipped through NSR. By 2035, Russia plans to ship about 160 million tonnes via the route. As per the Russian estimates, transit shipment will be about10 million tonnes by 2035.
International North-South Transport Corridor
Iran is pitching the 7,200 km-long, multimodal trade corridor known as the International North-South Transport Corridor (INSTC) as an alternative to the Suez Canal. The project by Russia, Iran and India, “is a great option to replace the Suez Canal with a reduction in travel times to 20 days and savings of up to 30 percent,” writes Iranian Ambassador to Russia Kazem Jalali on his Facebook page late Saturday.
INSTC is a multimodal ship, rail and road-based transport network originating from Mumbai in India to Moscow via Iran and the Caspian Sea. Azerbaijan, Armenia, Belarus, Kazakhstan, Tajikistan, Kyrgyzstan, Ukraine, Oman and Syria have also joined this project. New routes through Azerbaijan and Central Asian countries have been proposed which will help to do away with the need to transfer cargoes between sea and land. The route is capable of reducing the cost of shipping by 30-60 percent, and reduces the transit time from Mumbai to western Russia from 40 to 20 days. INSTC could also be expanded as a prospective route for trade between India and Western Europe.
New Silk Road freight service
The China-Europe freight train service is not just an option but a current reality. The New Silk Road freight service covers about 13,000km of land and has been expanding its range of destinations over the years.
Suez Canal is not the only economic choke point in the world. The other choke points are Panama Canal, Strait of Hormuz and Strait of Malacca.