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In 2021 and 2022, as we ran short of practically everything, we encountered a reminder of how physical our society is. For all our online shopping and wireless internet, things must still be moved to us by ship and air and rail and road—ordinarily invisible supply chains that came into view only when they broke down.
In 2023, we’ve been offered another set of reminders of the physicality of our world; of how, even in an age when we’re being invited to escape into abstract virtual metaverses, geography still matters.
Two wars, in Ukraine and Gaza, are being fought essentially over the control of land—the plain geographical reason behind wars for centuries. Meanwhile, the El Nino effect has abbreviated the monsoon in India, brought disease and floods to South America, and knocked as much as $3 trillion off the global economy. And in the final months of the year, attacks on ships passing through a Red Sea chokepoint have forced the shipping industry to take long, expensive alternate routes around Africa.
The attacks, by Houthi militants from Yemen, are ostensibly reprisals for Israel’s ongoing war in Gaza. Conducted in the southern Red Sea and the Bab al-Mandab strait, the attacks have targeted commercial ships passing through en route to the Suez Canal at the northern end of the Red Sea. (With at least one vessel, the Galaxy Leader, partially owned by an Israeli shipping tycoon, militants commandeered it and sailed it to Yemen.) Ships that brave the Red Sea must now watch for drones, cruise missiles, and ballistic missiles.
The US has cobbled together a naval coalition to help ward off such attacks. But a number of major shipping companies have already announced drastic changes in their routes, sending their vessels the long way around Africa rather than through the Suez. “We have faith that a solution enabling a return to using the Suez Canal and transiting through the Red Sea...will be introduced in the near future, but at this time it remains difficult to determine exactly when this will be,” Møller–Maersk, the Danish shipping giant, said in a statement last week. A fifth of all container shipping goes through the Suez, as does around 12% of oil and 8% of natural gas cargo.
The Houthis’ assault on commercial shipping is, of course, a political reaction to a political event. But they also happen to be in the vicinity of an artefact of pure geography: the Bab al-Mandab, or the “Gate of Tears,” a natural strait 18 miles wide, controlling access to the Suez beyond. It’s possible to stop the Houthis, but it will be impossible to do anything about the fact that a narrow Red Sea passage determines the health and safety of global trade.
THE OTHER CANAL
What are the odds that both of the world’s primary shipping canals are in jeopardy at the same time?
A severe drought has afflicted one of the lakes that supplies the Panama Canal with water, rendering it passable to ships. This past October was the driest since Panama started keeping rainfall records in 1950. Starting next month, the Panama Canal Authority will allow only 24 transit slots a day, down from roughly 36 a year earlier. With some exceptions, the authority will permit just one slot per customer per day.
While the troubles in the Red Sea are temporary, the Panama Canal’s woes are connected, in part, to climate change. The drought emptying its lake has already lasted 20 years, forcing Panama’s officials to come up with a $2 billion scheme to resupply the canal with fresh water from nearby river basins. The excavation of the canal back in the early 1900s, over the course of a backbreaking decade, was one kind of human intervention in geography. If the canal were to dry up, it would be a reversal of sorts: geography’s intervention in human affairs.
BY THE DIGITS
1: The number of weeks added to a ship’s journey between the US and China if it uses the Suez Canal instead of the Panama Canal
22: The number of days that a ship saves when it goes through the Panama Canal instead of around Cape Horn in South America
26: The number of days added to a ship’s journey when it goes around Africa instead of through the Suez Canal
$800,000: The additional fuel cost that a ship incurred when it went around the Cape of Good Hope back in 2021, when the Suez Canal was blocked by a grounded ship for several days.
More than 100: The number of container ships that have, thus far, avoided the Red Sea to go around Africa
12%: The share of global trade that passes through the Red Sea
1.2%: The rise in the price of Brent crude oil futures, as a result of the disruption caused to oil tanker routes by the Red Sea crisis
ONE 🌏 THING
Among the countries hit by the Red Sea crisis is Egypt, which relies heavily on Suez Canal transit fees. Over the fiscal year ending June 2023, even as Egypt’s pound tumbled and inflation surged, its Suez Canal Authority took in a record $9.4 billion in fees from ships transiting the canal. (For context, Egypt’s foreign exchange reserves stood at $24 billion in October.) Starting in January, ships will pay even more to pass through the Suez; Egypt has raised transit fees by 15% for oil and natural gas tankers, container ships, and cruise ships.
For those fees to reach the Egyptian state’s pockets, though, ships have to pay them—and to pay them, they have to decide to take the canal. Making the Red Sea safe for shipping is manifestly in Egypt’s interests. Yet Egypt’s president, Abdel Fattah al-Sisi, newly elected into a third term this past week, has kept his country out of the US naval coalition to protect Red Sea shipping. Joining the US in this project is presumably radioactive for Sisi, who has linked his electoral win to opposition to Israel and its allies in the ongoing war in Gaza. If so, it’s a classic example of politics trumping economics.
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Have a festive weekend!
—Samanth Subramanian, Weekend Brief editor