Experts say the Suez crisis highlights how little we understand about global trade.
IS THERE ANYTHING to be said for another international crisis?
It’s almost hard to believe that in the middle of a pandemic during which global supply chains have proved more or less robust, international commerce was almost brought to its knees last week when the Suez Canal was blocked for a period of six days after a single ship ran aground.
Maritime data company Lloyd’s List estimates the incident held up an estimated $9.6 billion (€8.15 billion) worth of cargo each day between Asia and Europe.
Egypt alone lost between $12 and $15 million (around €10 million to €12.7 million) in revenues for every day the waterway was closed, according to the Suez Canal Authority and the impact has been felt further afield.
Traffic on the canal, a conduit for over 10% of world trade, began moving again on Monday, after tailbacks totalling 425 ships built up to the north and south.
But the incident has sparked a debate about exactly how robust this system is.
Over the past 30 years, globalisation has increased the level of interdependence between increasingly labyrinthine international supply chains, many of which rely on the ‘just in time’ logistics model. When issues arise in one place, even temporary blockages can bring transport channels to a very sudden and shuddering halt elsewhere.
The need for speed has only heightened in recent years by the rise of global e-commerce, exemplified by Amazon and its next-day delivery model.
“What’s happened really since the 1990s is that we now make goods in a very different way,” explains trade expert David Henig, UK director at the European Centre For International Political Economy.
“We no longer make everything in one country and then send them to another. We have products and services pinging around the globe, therefore you’ve got huge ships flying around the Suez; you have trains and planes and whatever. That’s what trade is now.”
The question, Henig believes, isn’t one of resilience, it’s one of complexity.
“You’ve got a very complex global system, which is providing us more goods than ever before, and probably in its own way, is really quite resilient,” he says.
“The problem really is we don’t know that much about it. I don’t know that much about it. Even economists don’t quite know quite how this global trade system works. There’s always going to be a problem if we don’t understand things.”
The trouble is that it’s only after crises like Suez or the European vaccine supply debacle arise that we realise “oh, that’s how it works”, Henig says.
“We’re always sort of surprised by how it works.”
All at sea
This complex, interconnected global system is also completely reliant on the labour of transport workers, whose plight the Suez crisis has highlighted.
Despite the impact of new technologies on logistics, the show continues to be kept on the road by a workforce of some 1.6 million seafarers drawn from every corner of the world.
It’s a job only made more difficult by the pandemic.
Ireland is one of just 60 United Nations member states out of 193 that have designated ship labourers as essential workers since the start of Covid-19 crisis. This is despite a UN resolution, passed by the General Assembly last December, calling on members to do so.
The net result of this is that, in many cases, it’s been very difficult for ships to change crews in ports. It means ship workers often have to spend more time at sea than their contracts of employment stipulate. It can also mean missed travel connections and extra time stuck in foreign ports.
Even before the Suez incident, the situation faced by ship workers was already at crisis levels, a direct consequence of Covid.
“Hundreds of thousands of seafarers have been forced to work long beyond their contracted time,” said International Maritime Organisation secretary-general Kitack Lim in a statement last month.
“We have estimated that throughout the last months of 2020 and up to the beginning of this year, 400,000 seafarers still needed to be repatriated, with a similar number needing to join ships.
That number has been halved in the first quarter of 2021, Lim said, thanks to the concerted effort of national governments but problems still remain.
Mickey Whelan, a SIPTU organiser and ship inspector with the International Transport Federation, says Suez could well have exacerbated these issues for many of the ship workers stuck in the six-day traffic jam as a result of the blockage.
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In his experience, most shipping companies will do their level best to help out their employees. However, Whelan says he has inspected ships and met crews that have been stuck at sea for 12 to 18 months — well beyond their contractually agreed timeframe.
He believes the consequences for seafarers caught up in the incident will probably never be fully understood.
“You have this one huge ship on one side and a massive queue of ships on the other side, and crews are all on board,” he says.
“Who knows what travel arrangements they were trying to get to in order to fly home! There’s a knock-on effect that’s unquantified.”
Even before Suez and the pandemic, political storm clouds had been gathering around globalisation and international free trade from all side of the spectrum.
From the right, the desire to “bring home” jobs lost to offshoring over the past 30 years was a major component of the Trump administration’s political identity.
From the left, perennial concerns about the impact of free trade on workers’ rights and the climate, in particular, are being given a fresh airing in the debate over ratification of the Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada.
But again, Henig says, the system’s complexity remains an obstacle to informed discussion, particularly among policymakers.
“The domestic political debates are nowhere near covering these issues so when something like Suez comes up… you always get these sort of simplistic answers. For me it just shows up the gap with reality and these simplistic answers,” he believes.
“And actually it’s not at all simple. We’ve suddenly got a global trade system that no one really understands.”
Additional reporting by AFP