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The Suez Canal and the other 3 great strategic maritime crossings for international trade

It took just 6 days of grounding the freighter Ever Given, in the Suez Canal, to cause major problems in international trade around the world.

The price of oil rose sharply and countless companies were seriously affected, from domestic transportation providers to retailers, supermarkets and manufacturers.

Even, according to the analysis of the German insurer Allianz, there may be a reduction in world trade growth annual between 0.2 and 0.4 percentage points.

And it is that this maritime passage is vital for supply chains around the world. But he’s not the only one.

The Suez Canal joins a long list of roads that are key to the functioning of the global economy.

What are some of these crucial points for maritime trade and what are their characteristics? At BBC Mundo we tell you about it.

1. Suez Canal

This portal between East and West, located in Egypt, began to function in 1869. It has a length of 193 kilometers and connects the Mediterranean Sea with the Red Sea.

In 2020, they transited 19,311 boats over there with around 1,210 million tons of cargo, according to data from the Suez Canal Authority (ACS).

This represents the 12% of trade global, which makes it vital for the normal functioning of the economy in the world.

  • How much has the blockade of the Suez Canal cost so far?
  • 3 keys to the operation that unloaded the Ever Given freighter in the Suez Canal

Among the goods that pass through this place, one of the most relevant is the Petroleum.

According to ACS estimates, almost two million barrels of crude they pass by every day.

Furthermore, approximately the 8% liquefied natural gas It is transported through the Suez Canal.

“For the supply of Europe this channel is very important “, the Spanish naval engineer explains to BBC Mundo Jorge Pla Peralonso, expert in maritime traffic.

And it is that without Suez, shipments that travel between Asia-Pacific, the Indian Ocean, the Arabian Sea and Europe would have to cross the entire African continent, which would increase costs and substantially lengthen travel times.

In fact, one of the alternative routes surrounding thecabo of Good Hope It takes almost 9 days longer than the Suez Canal route.

According to Peralonso, this seaway has only been closed three times in history, as a result of political conflicts. “And the crisis was gigantic and that there was not the volume of traffic that there is now,” he says.

The channel is also an important source of income for Egypt. Until before the pandemic, the trade that passed through here contributed to the 2% of the country’s GDP, according to Moody’s Investors Service analysis.

2. Panama Canal

The opening of the Panama Canal, in 1914, revolutionized maritime trade in the world.

For more than a century, one of the great works of Latin American engineering of the 20th century has constituted the shortest route between the two largest oceans in the world: the Atlantic and the Pacific.

Almost the 6% of world trade: more of 13.000 ships They cross it from one side to the other every year to carry their goods.

The dimension of this step is gigantic: they cross it 144 sea routes connecting 160 countries and with destinations around 1.700 ports.

  • Can a blockade like the one that affects the Suez Canal occur in the Panama Canal?

It is also crucial for Panama: in fiscal year 2020, the canal’s direct contribution to the country was 2,7% relative to GDP, according to data from the Panama Canal Authority (ACP).

“It is a great source of income for Panama. It is a very important step for all traffic to the United States and is obviously an alternative to east-west traffic in the world,” says Jorge Pla Peralonso.

It is also for Latin America. “For the Latin American region it is fundamental. Most of the countries benefit from this channel, there is a lot of trade to the Caribbean and from the Caribbean to the Pacific.”

But this channel, compared to the rest, is more complex.

It is built on the basis of a lock system which, although it has allowed it to operate uninterruptedly, may be its main weakness, since it depends on the rains for its operation.

In recent years, especially in 2016Canal extensions have been made to optimize water use.

But the artificial road between the Pacific and the Atlantic suffered one of its worst natural crises in 2020 when it was discovered that he was running out of water.

Low rainfall in 2019 it put in check the complicated lock mechanism that moves ships from one sea to another.

  • Why the Panama Canal is running out of water (and it has nothing to do with the coronavirus crisis)

Thus, the institution in charge of the canal continues to work on various measures to maintain its operation, including reducing the number of ships that cross it.

3. Strait of Hormuz

It is undoubtedly one of the most strategic maritime crossings in the world, connecting oil producers in the Middle East with key markets in Asia Pacific, Europe and North America.

  • Why the Strait of Hormuz is important and how this moment of high tension between the United States and Iran came to be

With around 160 kilómetros long, the Strait of Hormuz is, unlike the Suez and Panama Canals, a maritime passage natural and it is not controlled by any country.

It links the Persian Gulf with the Gulf of Oman – where countries such as Iran, Kuwait, Saudi Arabia, Bahrain, Qatar and the United Arab Emirates are located – and the Arabian Sea.

At its narrowest point, the canal separates Oman from Iran by just 33 kilometers.

It has two sea lanes, and each one measures barely 3km.

Although there are no official figures regarding the transit of this canal, according to the United States Energy Information Administration (EIA, for its acronym in English), around a fifth of the world oil exports pass by here.

That is, an average of almost 21 million barrels of crude they pass through this maritime passage every day. This represents, according to the EIA, the 21%of world consumption of petroleum-derived liquids.

Most of the merchandise (oil) that passes through this strait is from Saudi Arabia and its main destinations are the Asian markets in China, India, Japan, South Korea and Singapore.

It is to be expected, then, that this area will be the center of tension between several countries.

In 2018, in fact, it was in the spotlight after Iran once again threatened to block the passage. This, after Donald Trump retired USA of the nuclear deal, reimposing tough sanctions on Tehran.

Iran’s threats to block the passage worry the world, because if this route were to become impracticable, the world’s oil supply would fall by one. 20%, according to figures compiled before the latest U.S. sanctions, cited by the Washington Post.

However, Jorge Pla Peralonso assures that it is a warning to “impose pressure.”

“It is very difficult for a country that lives on oil to close its outlet,” he says.

4. Strait of Malacca

This sea passage runs along about 930 kilometers between the Indian Ocean and the Pacific.

At its narrowest point, opposite Singapore, it has only 2,7 kilometers wide.

According to The Atlantic and Sea Trade Maritime, 84.000 ships cross it every year, which represents a 25% of trade world.

Two-thirds of the tonnage that passes through the strait consists of crude oil from the Persian Gulf. This is around 16 million barrels destined, for the most part, to China and Japan.

But it is also important for bulk cargoes and containers.

The strait has become increasingly important to economic powers such as China, Japan and South Korea, but also for the emerging countries of Southeast Asia.

“This is a key step for all the merchandise between Half East and the Far East. It is a fundamental traffic between India, China and the Persian Gulf, “says Peralonso.

But China does not want to continue depending on this strait because many nations have geopolitical interests there.

For this reason, in 2013 the president of that country, Xi Jinping, launched an ambitious infrastructure project called China-Pakistan Economic Corridor.

This is part of the “New Silk Road” that the Asian giant plans to finalize in the coming years.

  • “The new Silk Road”: the trade corridor with which China wants to extend its influence to the Middle East and Africa

Its objective is to link the western region of China with the Arabian Sea and the Indian Ocean, via Pakistan.

And China’s reason for supporting the megaproject is strategic: the Asian giant wants to get land access to the Indian Ocean. more practical and efficient than the one you have so far across the Straits of Malacca.

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