Adapting as China boosts supply lines

Adapting as China boosts supply lines

SINGAPORE - A Chinese cargo ship making its way to a Dutch port via the frigid northern Russian coastline is a graphic demonstration of the truism that supply lines are critical in peacetime, as in wartime. If the vessel which departed from Dalian in north-east China navigates safely the ice-strewn Arctic Ocean, it would reach Rotterdam in about 35 days, two weeks sooner than a voyage via the Strait of Malacca.

Some project that the rate of global warming will render the Arctic region completely ice-free during summer months by around 2030. If infrastructural challenges are met to make such remote waters a practical high-volume shipping route, traversing the northern regions of Russia and Canada to link up the northern parts of Asia, Europe and the Americas could change the face of maritime trade.

But China's main concern is strategic - to cover itself against the eventuality, however remote it may seem, that conflict would compromise its energy and goods supply lines via South-east Asia and the Suez Canal.

Variations of its logistical route planning have been much in evidence, geared towards mitigating the effects of a blockade or canal closure. Pipelines through Pakistan, Myanmar and Central Asia carry oil and gas, as will a spur line from Siberia. It has built ports, or is managing them, in Sri Lanka and Pakistan.

To top it all, China plans to finance a canal to be cut though Nicaragua, to complement the Panama Canal which cannot handle ultra-large vessels. This project seems more a statement of intent for now as the planned 200km length is a formidable challenge. What could swing it for the Chinese is its hedging value.

China regards the Panama Canal, of which it is the second largest user after the United States, as largely an American-controlled waterway. It's all about moving chess pieces.

Countries which lie in the path of China's logistical network have to play to their strengths to gain a share of the dispersed traffic, assuming the Arctic route is found to be commercially viable. Among unknown variables are duration of ice cover and the cost of building sturdier ships to withstand extreme weather.

The short Arctic summer will work to Singapore's advantage, and shipping times for cargo haulage between some European ports, New York and South-east Asia are shorter via the Malacca Strait.

Destinations at which cargoes are offloaded and loaded will determine cost-effective routing. And there is little likelihood of the Suez and Panama canals becoming any less important. But voracious demand by the north Asian powerhouses and their trade inter-dependence with Europe and the US present scenarios for which nations in the arc's periphery would be wise to prepare themselves.

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