Chokepoints
Rotterdam
Shanghai
T he journey from Shanghai to Rotterdam takes a container ship a month. Setting out at night, the vessel—a shadow amid glowing pleasure boats—begins by sliding past the Chinese city’s banks. Over the following fortnight it snakes through the Taiwan Strait and the South China Sea, threads the Strait of Malacca and crosses the Indian Ocean. Next come the Bab al-Mandab and the Suez Canal. Then the ship passes Gibraltar. After 30-odd days, it coasts through the English Channel, approaching its destination. Since the 1980s these waterways have been taken for granted. Now that the Strait of Hormuz is closed and the Red Sea hostage to the whims of Yemeni militias, it is clear that even a superpower with America’s might cannot guarantee safe passage in the face of drones, speedboats and mines. Shipping firms and world leaders are waking up to the fact that freedom of navigation is breaking down. Where, then, is international commerce most vulnerable? And where would be the most painful place for the next blockage? The importance of a single passage depends not just on the trade it carries, but on the available alternatives. For some passages—such as the Red Sea, where attacks by the Houthis have sent insurance rates rocketing—disruption is already priced in. We have, therefore, built a model to account for both how trade is conducted at present and where ships would go if access was cut off. It suggests that the closure of Hormuz, although extraordinarily expensive, is far from the worst scenario. Some 85% of all global trade by volume, and 55% by value, moves by sea. Here is a map of the most popular routes. Our model starts by finding the most efficient journeys between the world’s busiest ports. Then, using data on country-to-country trade, it calculates the share of seaborne traffic currently carried on each route (while assuming that adjacent countries trade mostly by land). This allows it to assess how trade would adapt if any route was blocked. The Taiwan Strait, for instance, is of enormous geopolitical importance. According to our model, it also carries 13% of seaborne trade by value. Yet dodging it requires only a small detour.
Alternative routes
Malacca is the world’s busiest strait by traffic value. Once again, however, convenient alternatives exist. Shutting the strait would increase the distance ships need to travel by just 9% on average.
Alternative routes
Blocked routes
More dramatic scenarios are possible. In a war over Taiwan, all the straits between Asia and Australia could be blocked, requiring an enormous detour around the Antipodes. The length of affected routes would increase by 58% on average. Other scenarios are harder to imagine, but would have brutal consequences. The closure of both the Strait of Gibraltar and the Suez Canal would make it impossible for ships to pass from the Mediterranean and Black Sea to other oceans.
Alternative routes
Blocked routesOur model assesses 14 scenarios in all. It finds that Hormuz is exceptional in one sense: no other single disruption has the potential to outright block (rather than reroute) so much trade. The Middle Eastern waterway surpasses both the Bosporus and Oresund straits—and the traffic they funnel to the Black Sea and the Baltic, respectively—in this regard. Moreover, our model may understate the waterway’s importance. It misses some important considerations, such as the composition of goods. Oil and liquefied gas cannot easily be transported by air or land. Nonetheless, other blockages would affect a far greater share of global trade—indicating they have the potential to cause still more trouble. Whereas our model suggests that 6% of maritime trade is affected by the closure of Hormuz, the closure of the Taiwan Strait would affect 13%; the Suez Canal, 16%; and the South China Sea, 24%. The very worst scenario—where all the straits from Malacca to Australia are closed—would affect 26%.
The Economist
America may have begun the war in Iran, yet Asia and Europe will suffer worse economic consequences. Uncle Sam would be similarly insulated with the blockage of many other waterways. The closure of the Korea strait would cause America the most trade problems, affecting 14% of its commerce but prompting only minor detours. For the European Union, the combined closure of Gibraltar and Suez would be catastrophic—affecting perhaps 40% of its seaborne trade, with 26% entirely blocked. China is also vulnerable. Closures in South-East Asia would affect more than 40% of its seaborne trade; closures of the Red Sea passages, over 25%. With time, human ingenuity finds a way around most obstacles. Pipelines can be expanded, trucking routes established and alternative supplies secured. But that is an inefficient process, which saddles the global economy with big, unnecessary costs. Whatever happens next, the events of the past month will prompt companies to build redundancy into their operations, to stockpile more, to use closer but less efficient suppliers and so on. They will be aware that the next time could be worse. ■
Sources: BACI; European Space Agency; US National Centres for Environmental Information; NOAA Geosciences Lab/SOEST, University of Hawaii; The Economist
Methodology
Our model is based on calculating optimal routes between all big ports, and estimating the share of maritime commerce carried along each. To construct it, we first identified the location of 298 coastal cities in 128 countries and then calculated the optimal route between each pair, accounting for ice in polar regions and using detailed maps of the world’s oceans and canals.
We used a harmonised set of bilateral trade figures from BACI, a database, to roughly estimate the share of oceanic trade along each route. We assumed that most adjacent countries trade by land (with a few notable exceptions, such as China and India, which share a border in the Himalayas), and that bilateral trade by sea otherwise reflects bilateral trade overall. For countries with multiple ports, we assumed that the share of trade they ferried reflected their relative population size. And for countries bordering multiple oceans—where using ports on one coast would be vastly longer for a given route than ports on the other—we assumed they made the efficient choice.
To calculate each scenario, we blocked relevant parts of the world’s oceans, and recalculated optimal routes for all port-to-port trips. We cross-checked our estimated traffic volumes (both by port and for our key passages) against independent estimates. Our model deliberately looks at only the short-term impact.