In the past 2 months, the Red Sea has “wobbled” worryingly, witnessing a sudden increase in attacks by armed forces. Houthis in the strategic Bab el-Mandeb Strait connecting the Red Sea with the Arabian Sea.
A series of the largest shipping companies world had to suspend transit through the Suez Canal for several weeks and even had to reroute many their sea routes as the US and UK launched attacks against the Houthi group in Yemen and the situation escalated.
While ships loitering in the Mediterranean or Arabia must reconsidering its options other ships were busy circumnavigating the strait.
In mid-December 2023 Saudi Arabia quickly facilitated the formation of a “land bridge” from Arabia to the Mediterranean through which goods arriving at Persian Gulf ports such as Jebel Ali in the United Arab Emirates (UAE) or Mina Salman in Bahrain can transit by truck to Israel’s Haifa Port.
Geopolitical shocks in the Red Sea and the Russia-Ukraine war have pushed up logistics costs and food prices while the world economy – and especially developing countries – are struggling to recover from the pain finance caused by the Covid-19 pandemic. The recent eruption of another volcano in Iceland has also increased air transport costs.
And according to experts, it is unlikely to find a solution from episodic summits between Beijing and Washington or group meetings such as the G7 or from international conferences such as the World Economic Forum (WEF) or United Nations climate conferences.
Instead There is a more effective solution: building more supply chain transportation routes to meet global freight demand.
According to experts in this issue, there are It can be seen that China is “one step ahead” and has been taking action for many years. When China held a meeting with leaders and representatives from more than 130 countries in Beijing in October 2023 to celebrate the 10th anniversary of the Belt and Road Initiative, the West was not happy.</ p>
But from a functional perspective the BRI represents what countries are doing: building as many roads as possible so that supply meets demand both as a hedge against unforeseen disruptions and also to enhance a country’s connectivity and influence.
The need to hedge against such risks became all too clear in 2021 when the giant container ship Ever Given ran aground in the Canal The Suez peach caused trade between Europe and Asia to freeze just as the world was looking for ways to restore trade amid the recession caused by Covid-19.
Even though that outstanding burden has been resolved within 2 weeks but it is a worrying reality for the world’s supply chain. It also causes insurance costs for blocked shipments to skyrocket.
Cho Whether the weakness of maritime vital areas has been exposed after the Houthi forces stepped up attacks in the Red Sea, Russia’s blockade on the Black Sea and drought in the Panama Canal, there is no reason to important locations of the world economy such as North America Europe and Asia become “hostages” to such sporadic and uncontrollable events.
Certainly the Ships can choose the route around Africa’s Cape of Good Hope, adding 10-14 days to the normal transit time of 20-30 days. But now they have a wiser choice than China China and Europe (which are each other’s largest trading partners) go first: trans-Eurasian rail cargo. This transit system doubled to 1,000 freight trains per month in early 2021 with increased reliability and punctuality.
Construction of more highways and trans-rail The Eurasian continent as well as ports along the Indian Ocean and the Arctic are essential to create flexibility and alternative routes for the crucial global freight movement.
< p>Such investments are an effective hedge against inflationary shocks due to geopolitical protectionism and climate change.
Does the BRI bring relief? significant change?
It is difficult to argue that the BRI has brought about any significant change. Since 2013 about $1 trillion in capital has flowed into BRI member countries in non-financial investment and construction projects.
For developing countries with overpopulation Solid infrastructure is essential to meet domestic demand creating an economic multiplier effect and building connectivity with the world economy. However, peripheral countries in Europe such as Hungary and Serbia are also countries that benefit from the BRI.
For other countries such as Zambia and Sri Lanka the BRI has come at a cost to them. heavy debt and loss of some other political benefits.
In Western Europe Italy joined the BRI in 2019 but decided to “leave” at the end of 2023. This shows that Europe Europe is unhappy about not having full reciprocal access to the Chinese market in its huge bilateral trade.
Meanwhile at the G20 summit in September September 2023 in New Delhi The proposed $20 billion India-Middle East-Europe Economic Corridor (IMEC) was quickly hailed by the US as a rival to the BRI. Indian Prime Minister Narendra Modi is also touting a trade corridor to Russia through Iran.
European Union (EU) member states have aligned with the US to counter its influence China’s strategy in the Indo-Pacific and defend its market against accusations of Beijing dumping solar panels and electric vehicles.
But Europe also still wants increasing exports to Arab and Asian economies when leaders of these countries regularly visit India Indonesia and Singapore…
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