Theme 1 Changing maritime trade patterns Arctic trade routes January 2024

Summary

This video discusses the impact of geopolitical tensions and climate change on maritime trade routes, particularly focusing on the Red Sea and the Panama Canal. It explores the viability of Arctic routes as alternatives due to increasing ice melt, technological advancements, and global shipping challenges. Despite growing trade volumes through the Arctic, significant constraints such as high costs, seasonal limitations, and geopolitical tensions remain. The video also touches on environmental concerns and the potential future of global shipping.

Takeaways

• 🌍 The video discusses the impact of geopolitical issues on maritime choke points, particularly the Red Sea and the Panama Canal, and their effects on global trade.
• 🚢 Shipping companies are seeking alternatives to traditional routes due to instability in the Red Sea, causing a shift in maritime shipping patterns.
• 📉 There has been a significant decline in trade volume through the Panama Canal, contributing to global economic instability.
• 📈 The cost of shipping has increased due to the need for alternative routes, affecting businesses and consumers worldwide.
• ❄️ The Arctic is being considered as a potential alternative route for maritime trade due to climate change and reduced ice coverage.
• 🌡️ Global warming has accelerated the viability of Arctic routes, with the Arctic warming four times faster than the global average.
• 🚀 Technological advancements are making navigation through Arctic waters more feasible, increasing the potential for these routes.
• 📊 Trade volumes through the Arctic routes are increasing, with a 75% increase in the Northern Sea Route between 2014 and 2022.
• ❓ Despite the increase in trade, the Arctic routes still face significant constraints, including high costs, seasonal limitations, and geopolitical tensions.
• 🌱 Environmental concerns are a major obstacle for increased shipping in the Arctic, with potential threats to native species and ecosystems.

Q & A

What is the primary topic of the video script?

The primary topic of the video script is the impact of geopolitical issues and climate change on maritime choke points, specifically focusing on the Red Sea and the potential of Arctic routes as alternatives for global shipping.

What recent issues have affected maritime shipping in the Red Sea?

Recent issues affecting maritime shipping in the Red Sea include Houthi attacks on container ships and instability around the Bab-el-Mandeb Strait, which have caused significant disruptions to global trade routes and economies.

How have shipping companies responded to the instability in the Red Sea?

Shipping companies have responded to the instability in the Red Sea by diverting their routes away from the Suez Canal to the Cape of Good Hope, leading to increased costs and longer transit times.

What are the economic impacts of the disruptions in the Red Sea on global trade?

The disruptions in the Red Sea have led to higher costs for shipping, affecting supply chains and causing inflationary pressures on businesses and consumers, as seen with companies like Ikea and Next in the UK.

What other maritime choke point has experienced issues affecting global trade volumes?

The Panama Canal has also experienced issues affecting global trade volumes, with a 30% decline in trade passing through it from November 2023 to January 2024.

Why are Arctic routes being considered as alternatives for global shipping?

Arctic routes are being considered as alternatives due to the increasing instability in traditional maritime trade routes and the potential for these routes to significantly reduce journey times by up to 40%.

What are the three potential Arctic trade routes mentioned in the script?

The three potential Arctic trade routes mentioned are the Northern Sea Route, the Northwest Passage, and the Transpolar Sea Route.

How has global warming affected the viability of Arctic shipping routes?

Global warming has caused the Arctic to warm four times faster than the global average, leading to a reduction in ice coverage and making the Arctic routes more navigable, potentially leading to ice-free summers by the 2040s.

What technological advancements are making Arctic routes more viable for shipping?

Technological advancements include improved navigation systems and ice-breaking capabilities, which are crucial for navigating the challenging icy conditions in the Arctic.

What are the current limitations and challenges faced by Arctic shipping routes?

Current limitations and challenges faced by Arctic shipping routes include high seasonality, high costs, extreme weather conditions, the need for specialist ships and expertise, geopolitical tensions, and environmental concerns.

What steps have been taken recently to increase the viability of Arctic shipping routes?

Recent steps include Russia signing an agreement with DP World to develop Arctic container shipping and the Chinese shipping line completing its first round trip on the Arctic route, indicating increasing interest and investment in these routes.

Outlines

00:00

🌍 Geopolitical Impacts on Maritime Trade Routes

This paragraph discusses the effects of geopolitical tensions on maritime trade routes, specifically focusing on the Red Sea and the Suez Canal. The speaker highlights the instability caused by the Houthi attacks on container ships and the impact on global trade. Shipping companies are seeking alternatives, such as rerouting through the Cape of Good Hope, which has economic repercussions including increased fuel costs and inflationary impacts on businesses and consumers. The speaker emphasizes the importance of maritime trade to the global economy and mentions the significant decline in trade volume through the Panama Canal due to climate-related issues, suggesting a broader trend of disruption in maritime trade.

05:01

🛳️ Exploring Arctic Shipping Routes as Alternatives

The second paragraph explores the viability of Arctic shipping routes as alternatives to traditional trade routes facing geopolitical and environmental challenges. The speaker outlines three potential Arctic routes: the Northern Sea Route, the Northwest Passage, and the Transpolar Sea Route. These routes are being considered by maritime trade companies due to the increasing disruption in traditional routes. The paragraph discusses how global warming is making these routes more navigable, with the Arctic experiencing ice-free summers by the 2040s. The speaker also mentions technological advancements aiding navigation in these challenging waters and provides examples of recent increases in Arctic trade volumes, including Russia's ambitions to significantly boost its Arctic shipping and collaborations with international logistics companies.

10:03

❄️ Challenges and Considerations of Arctic Shipping

The final paragraph delves into the challenges and considerations of using Arctic shipping routes. Despite the potential for reduced journey times, the high costs, seasonal availability, and the need for specialized ships and expertise make these routes less viable. The speaker discusses the high insurance costs due to the risks of navigation and the potential for increased accidents in the region. Additionally, geopolitical tensions, such as disagreements over territorial waters, further complicate the use of Arctic routes. The paragraph concludes with environmental concerns, including the ban on heavy fuel oil usage in the Arctic and the potential impact on native species and local economies, suggesting that while Arctic shipping is becoming more viable, significant constraints remain.

Keywords

💡Maritime Choke Points

Maritime choke points refer to narrow waterways that are crucial for global shipping and trade. These points can significantly impact global supply chains if disrupted. In the video, the Red Sea and the Panama Canal are highlighted as choke points where issues such as Houthi attacks and climate change have caused instability, affecting global trade routes and economies.

💡Red Sea

The Red Sea is a significant maritime route that connects the Mediterranean Sea to the Indian Ocean. It is mentioned in the video as a region experiencing geopolitical tensions and instability, particularly around the Bab-el-Mandeb Strait, which has led to disruptions in global shipping and economic impacts.

💡Bab-el-Mandeb Strait

The Bab-el-Mandeb Strait is a critical maritime choke point located between Yemen and Djibouti. It is highlighted in the video as an area of instability due to Houthi attacks, which has caused shipping companies to seek alternative routes, impacting global trade and economies.

💡Global Economy

The global economy encompasses all economic activities across the world. The video discusses how disruptions in maritime choke points like the Red Sea and the Panama Canal affect the global economy by causing instability in maritime shipping routes and increasing costs for businesses and consumers.

💡Supply Chains

Supply chains describe the network of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer. The video explains how instability in maritime trade routes affects supply chains, leading to impacts on businesses and consumers, including higher costs and potential inflationary effects.

💡Panama Canal

The Panama Canal is a major maritime route that connects the Atlantic and Pacific Oceans, facilitating trade between these two bodies of water. The video discusses how issues such as climate change and reduced water levels have affected trade volumes passing through the canal, contributing to global trade disruptions.

💡Arctic Routes

Arctic routes refer to potential maritime trade paths through the Arctic region, which could serve as alternatives to traditional trade routes. The video explores the viability of these routes, considering factors such as climate change, technology, and geopolitical tensions.

💡Climate Change

Climate change refers to long-term shifts in temperatures and weather patterns. In the context of the video, climate change is discussed as a factor that has led to the reduction of Arctic ice, making previously impassable routes more navigable for shipping and potentially altering global trade patterns.

💡Geopolitical Tensions

Geopolitical tensions refer to conflicts or rivalries between nations that can affect global stability and trade. The video mentions how geopolitical tensions in regions like the Bab-el-Mandeb Strait and the Panama Canal disrupt maritime trade, and also discusses how these tensions could affect the use of Arctic routes for shipping.

💡Technological Advancements

Technological advancements in the video refer to the development of specialized technology needed to navigate challenging maritime routes like the Arctic. These advancements are making Arctic routes more viable for shipping by improving navigation and reducing the risks associated with icy conditions.

💡Environmental Concerns

Environmental concerns in the video pertain to the potential negative impacts of increased shipping traffic in the Arctic, such as oil spills, water and noise pollution, and threats to native species and local economies. These concerns are significant barriers to the widespread adoption of Arctic shipping routes.

Highlights

Update on geography program focusing on maritime choke points, particularly the Red Sea.

Discussion on the impact of Houthi attacks on container shipping and instability around the Bab-el-Mandeb Strait.

Exploration of how shipping companies are seeking alternatives due to problems in the Red Sea and Suez Canal.

Analysis of the global economic impact, including effects on trade routes and supply chains.

Headlines showcasing the effects on businesses and consumers in Europe and North America.

Seven out of ten of the world's largest shipping companies have suspended transit through the Red Sea.

Previous geography update explainer video on the Panama Canal and its trade issues.

30% decline in trade volume through the Panama Canal from November 2023 to January 2024.

Rising costs of shipping a 40-foot container from China to Northern Europe by 283% since December 2023.

Potential of the Arctic as a maritime trade route and its connection to global trade patterns.

Three potential Arctic trade routes: Northern Sea Route, Northwest Passage, and Transpolar Sea Route.

Historical challenges of Arctic navigation due to climate conditions and ice coverage.

Global warming's impact on Arctic ice coverage and the potential for ice-free summers by the 2040s.

Technological advancements aiding navigation through Arctic waters.

Trade volume through the Northern Sea Route increased by 75% between 2014 and 2022.

Russia's ambition to increase Arctic trade volumes by tenfold by 2035.

Agreement between Russia and DP World to develop Arctic container shipping.

New shipping line's completion of its first round trip on the Arctic route from Shanghai to St. Petersburg.

Constraints on the viability of Arctic routes including seasonality, high costs, and extreme weather.

Geopolitical tensions affecting the use of Arctic routes by Western vessels.

Environmental concerns and the ban on heavy fuel oil usage in the Arctic coming into force in 2029.

Transcripts

hello there everybody and um going to

give you another sort of uh addition to

the geography updates uh videos uh for

the BFI geography program um this one's

following up from the one that was

published last week um which was uh an

update explainer on um issues affecting

um Maritime choke points particular the

Red Sea uh and and again I just want to

sort of um s of follow on another uh

aspect that's connected uh to this um

and you can see on this uh the screen

there the key issues key terms in theme

one of the geography program um that

this might connect to uh and you know

when we look at um you know this is

taken from the the previous video uh

looking at how issues in the Red Sea the

houti attacks on uh container shipping

vessels instability around the Baba MB

straight uh creating great instability

in the global economy Maritime shipping

routes um and um you know the impact

that this is having on the not just

trade routs but the global economy uh as

well and um you you can see that

shipping companies are looking for

Alternatives you can see how you know

shipping has been diverted away from the

Red Sea and the SE Canal to the the Cape

of Good Hope in response to the the the

problems that encountered uh in that

region um and you know this had big

impact on the global economy as well um

these are just a selection of headlines

over the last few weeks of uh how this

um instability in the maritime trade

routes through the SE Canal have

affected Supply chains uh and how this

is starting to be felt as impacts on uh

businesses uh in markets in Europe in

North America as well um

and and you know impacts on consumers

ultimately as well as the the the higher

costs uh

that incurred through altern taking

alternative trade routes that take a

longer time incur more expense terms of

fuel costs and passed on to Consumers uh

so when you got big multinational

companies like Ikea uh and next uh sort

of clothing um of company in the in the

UK commercial retailer um then it's

likely to have an inflationary impact uh

and it just illustrates the importance

of Maritime iation in the global uh

economy uh when you see that sort of

disruption in in one part of the the

chain uh is having such significant

consequences and you know seven out of

10 uh the world's 10 largest shipping

companies have suspended their Transit

through the Red Sea um and it's not just

the problems in the Red Sea that are

creating these issues as well uh earlier

in the the the year uh back in well

September 2023 the academic this

Academic Year um did a geography update

explain a video looking at the Panama

Canal and the issues that were starting

to affect uh volumes of trade going

through the Panama Canal another choke

point in Maritime uh trade uh that

connects the Atlantic and Pacific Oceans

um you know we did that explainer back

in September and you know even since

November 2023 through to to January 2024

where we are now and I'm recording this

there's been a 30% decline in the volume

of trade passing through the Panama

Canal just over the the course of those

few months um so you know there are and

and you know as a result of you know the

the difficulties uh in these routs um

you know you can see the knock on

consequences in the in the costs for

shipping Goods around the world as well

so the cost of uh sending a 40f foot

container from China to nor northern

Europe uh has risen by 283 since

December

2023 um so as a result of these

challenges in global trade uh and the

passage of vessels through different

Maritime trade routes uh and the costs

that are incurred companies are looking

for alternative Alternatives those

established routs um and there are

potentially alternative routes elsewhere

in the world that could cut up to you

know could could Journey enormously 40%

of the length of joury Journeys made via

the sews canal and those routes are

located in the Arctic and this is why

the the previous explainer video then

connects into another uh theme one issue

uh you know and the the Arctic is a

potential Maritime trade route um and an

alternative and could affect uh trade

patterns um now question is it a viable

option you can see that there are three

uh possible trade routes uh varying

viability in the Arctic you've got the

Northern sea route passes along uh sort

of the the coast the northern Coastline

of Russia and and then Scandinavia um

you got the Northwest Passage um you

know passes sort of uh you know through

sort of islands along the coastlines of

of uh the USA and Canada and then you

got the trans pole the sea route that

runs right through the the middle of the

Arctic there as well so you got these

three routs uh and you know how viable

are they as Alternatives and they're

certainly being looked at by

increasingly by uh Maritime trade

companies containership companies um

particularly given as we sort of

explained the the disruption in those

traditional routes that have been

experienced whether that's through um

climate in the Panama Canal and reduced

water levels or whether that's through

geopolitical tensions in the Bab mandb

straight and the sew Canal um so is the

Arctic a viable option for global

Shipping well historically um the major

problem with navigating these roots has

been the the the uh climate conditions

uh that you face there and that much of

the SE is I Bound for large proportions

of the year however uh one of the sort

consequences of of global warming and

the acceleration of global warming uh

and the fact that the Arctic is warming

four times faster than um the the global

average um and that you know since 1978

the ice coverage in the Arctic has

shrunk by roughly 78,000 square

kilometers a year now just to put that

into context that the same as s 31% of

the land mass of Great Britain every

year um sort of an enormous scale uh

changing the the situation in the Arctic

um and you know a study in June 2023

suggested that uh by the 2040s the

Arctic could be experiencing its first

ice free Summers which again would would

make uh The Roots through the Arctic

increasingly viable for for maritime

trade um and another aspect that is

increasing that viability is the way in

which technology is developing you know

it requires a lot of specialist

technology to navigate through these icy

waters and and and challenging uh routs

uh and you know technology in terms of

uh helping navigate the The Roots the

technology involved in the ships is

increasing and improving all the time

particularly as countries are incre

invested in increasing the viability of

these options as well uh and so that

combination of the the the warming of

the Arctic the technological change um

is suggesting that it does become more

viable for global Shipping and the

evidence also suggests that trade

volumes through the Arctic routs are

already increasing as well if we take

the Northern sea route trade volume is

increased by

75% between 2014 and

2022 um and Russia uh who you know

controls you know the vast majority of

that Northern sea in terms of passing

through its its sort of territorial uh

Waters has Ambitions to increase uh

these trade volumes by tenfold by

2035 um again there's a potential link

here to theme two of geography as well

and integration strategies on ways in

which Russia could be looking to to S

promote its level of integration into

the global economy and use the Northern

sea rout as a potential development and

integration strategy uh so with that in

mind in October 2022 Russia signed an

agreement with DP World which is an

emirati logistics company uh to develop

Arctic container shipping um and uh also

in October 2022 the new new shipping

line which is a Chinese Shipping Company

completed its first round trip on the

Arctic route uh a voyage between

Shanghai and St Peter pburg um and so

you know yes it's becoming more viable

the statistics suggest that you know

it's been these roots are been used uh

more frequently um however you know even

though the the statistics suggest that

trade volumes are increasing enormously

through these regions the Arctic routs

still very are very much a s minor

aspect of Maritime trade compared to the

more established routes so in 2022 fewer

than 1700 ships navigate their way

through the Arctic um and you compare

that to other routes over 23,000 ships

pass through the SE canal and over

14,000 ships passing through the Panama

Canal um and you know on the other side

of the argument as well it suggests that

you know the Arctic isn't yet uh a a

truly viable option for Global uh

shipping there are many other

constraints that these routs face um

it's still highly seasonal most Arctic

voyages have been made in the summer uh

the Northwestern passage much more

icebound than the Northern sea route um

and when you take the transpolar sea

route uh that's only navigable using the

the heavy ice breakers and and you know

the enormous costs involved uh in in

that process as well um so it's still

highly seasonal um partly connected to

that uh is incredibly expensive so even

if Journey times could potentially be

reduced by using Arctic Roots compared

to other Maritime trade routs

um the the the the cost increase of

these roots in other aspects um makes it

less viable Insurance costs are very

high for ships and navigating their way

through these Waters or or looking to

Charter ships through these Waters um

that's because of the physical

challenges the poor mapping of the

region in terms of understanding the the

channels that that vessels can navigate

their way through considering the the

sort of draft of each vessel uh as well

in the depth of the waters um um you got

extreme and unpredictable weather so

given those aspects um it's likely that

you would find that there are be more

accidents uh for vessels traveling

through those Waters and if there's

likely to be more accidents then

insurance companies are going to charge

higher premiums so they can sort of uh

negate any cost advantages uh that could

be there through a shorter Journey um

because of the the the higher expenses

um also it's questionable whether it

does save time passing through these um

these routs um a 2023 study um found

that delays uh due to seaf fog uh

accounted for you know around about 25%

of the sailing time along the

Northwestern passage 4 to 11% along the

Northern sea route uh so again the

weather conditions can can take away any

time advantages that that might you know

might be physically a shorter distance

but um it actually still takes a long

time because of the other conditions

that that the vessels face going through

those routs and it requires specialist

ships and expertise you know to be

highly skilled and experienced uh

Navigator um to Pilot your vessels

through these Waters so that costs uh a

lot of money as well um another issue

that limits the viability of uh Arctic

Roots uh as an option for global

Shipping are the geopolitical tensions

that exist here we know that they have

been an issue in the Babel mandb

straight recently in and the seis Canal

but they they exist in these routes too

uh if ships want to pass uh and sail

along the Northern sea route they need

to get uh Russian uh permission to do

that as a result these roots are not

used by Western vessels and that brings

in other aspects of theme one again when

we think about Maritime zones

territorial Waters ezs um they are you

know an issue within the geopolitical

tensions uh in this region um with the

Northwestern passage there are

disagreements between Canada and the US

you know Transit rules and you know

whose waters are passing through um the

transpolar sea route because of its

geographical location would pass through

international waters so potentially if

if that does become a viable route

geopolitical tensions you would expect

wouldn't be as uh

considerable uh as they are for the

other two routs in the Arctic uh so

potentially that you know could diminish

geopolitical tensions as a as a factor

limiting the viability uh of Arctic

roots in the future um and the other

sort of big obstacle the the obvious

environmental concerns of increasing uh

container shipping through uh these

routes um in 2021 the international

Maritime organization a UN agency

adopted a ban on heavy fuel uh oil uh

usage in the Arctic which comes into

force in 2029 uh in the hope that this

will reduce the risk of oil spills and

and pollution uh in uh those Waters um

also the the Associated Air water noise

pollution that comes along with greater

shipping volumes um through this region

threaten native species and and the

locals who rely on them in terms of the

the kind of economies and the structure

of the economies in these Arctic regions

uh as well

so uh currently despite you know the the

amount of trade uh passing through these

regions increasing you know over the

last few years and and given the the

sort of instability that exists in other

Maritime trade routs right now um the

Arctic could increas in become a more

viable option for for global Shipping uh

but the constraints that exist there are

still very significant okay thank you