Low water levels in the Panama Canal. War in the Black Sea. The threat of Houthi attacks in the Bab el-Mandeb Strait. Traffic blocked in the Strait of Hormuz, with the possibility that the same could happen in future in the Malacca and Taiwan straits. In recent years, there has been an increase in the number of obstacles to the free movement of goods by sea, whether for geopolitical or climatic reasons.
In this new situation, it seems increasingly clear that the organisation of container shipping lines, which has emerged from over 30 “happy” years of globalisation, is becoming obsolete.
With the risks posed by maritime trade hotspots once again cruelly highlighted by the Middle East war, we have decided to carry out a forward-looking exercise by imagining a deep-sea network for 18,000-24,000 TEU vessels passing only through open seas and thus avoiding bottlenecks in the form of straits and canals.
In line with this idea, smaller container ships would have two possible roles:
This approach involves separating capacity for use on two different kinds of service:
Adaptation and anticipation are the historical foundations of merchant shipping. The shipping companies have shown themselves to be particularly agile in this respect, moreover.
This was demonstrated by their reaction to the attacks carried out by Yemen’s Houthi rebels in late 2023 in the Bab el-Mandeb Strait. The shipping companies got round this obstacle by diverting ships wholesale round the Cape of Good Hope. The decision to use this route, which follows a perfect V-shape round the African coast, to replace the traditional, shorter Suez Canal route between Asia and Europe, has been comforted by the start of the war in Iran.
Given the huge success of the Cape of Good Hope route, which is used by the great majority of vessels of more than 15,000 TEU, and according to the same logic, one can imagine setting up another V-shaped route round Cape Horn. This would create a global traffic system in the form of a W, which would keep clear of the main current and potential future hotspots.
Map created by the author - © Upply
The resemblance between this map and marine maps of the early 19th century is not a coincidence, since the Panama and Suez canals would no longer be used for the high-volume traffic handled by the 15,000 TEU-plus ships.
The W-shaped route would become a sort of central nervous system, connected to a dense capillary-style network via hubs served by smaller ships. The logic would be comparable to that behind the short-sea routes which currently exist in the intra-Asian trades.
This structure would generate new costs, longer transit times and a deterioration in carbon-reduction performance. Its robustness would, however, enable it to provide a partial response to current security problems, as well as taking account of the development prospects of Africa and Latin America in the present BRICS growth era.
The example of the Cape of Good Hope route, which is now considered to be a long-term option, is a perfect example of the post-Covid “new normal” which the market is currently getting used to. What should have been seen as a regression has become, if not the best solution, at least the most acceptable one in terms of service, price and security. Shippers have learned to live with it and the shipping companies have also benefited from it, since the unwanted change it represents has enabled them to partially counterbalance their endemic overcapacity.
Advantages for all
Such unobstructed routes could also help to restore service frequency and regularity, even if the particular risk of sailing round the capes in winter should not be minimised. For the shippers, they would represent the possibility of more reliable transit times, and, for the shipping companies, better use of their giant ships and a welcome absorption of current and future capacity shocks. Finally, the risk mitigation they bring could benefit both sides in terms of lower insurance premiums.
Another collateral factor, which could become important in the years to come, is that a W-shaped traffic structure could make nuclear-powered container ships more acceptable at a time when projects for such ships are starting to emerge.
The W-shaped traffic system is a response to four current challenges by:
At a time when merchant shipping’s freedom of navigation is being increasingly denied, even though it is a basic principle of international law, its “zero chokepoint” approach could be attractive in some quarters.
Two major obstacles stand in its way, however. On the one hand, MSC, Gemini, Ocean Alliance and Premier Alliance would all need to adopt the reconfiguration at the same time. This would clearly be the major obstacle. On the other, the environmental impact of such a reconfiguration would be in total opposition to global CO² emission reduction targets. That said, recent history has shown that international tensions and fossil fuel sobriety do not make good bedfellows.