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Japan mulls alternatives to Suez Canal after Ever Given shock

When the Ever Given, one of the world’s largest container ships, lost control in the midst of a dust storm and high winds on March 23, and became wedged across the Suez Canal, it was an event of international significance that also rekindled Japanese interest in finding alternative routes to Europe.

“The blocking of the Suez Canal accelerated things,” said James D J Brown, associate professor at Temple University Japan, even if the concerns about over-dependence on the canal have been around for a long time.

The canal is one of the most important arteries in global trade, and was completely blocked for six days.

The incident sent a shiver through supply chains in the Asia Pacific and beyond, reminding everyone just how much their trade, supplies, and prosperity were reliant on Ferdinand de Lesseps’s 19th-century engineering project in the Egyptian desert.

Japan lay half a world away from the sandstorm that crippled the Ever Given, but the impact of the event was keenly felt.

First of all, the Ever Given was owned by Shoei Kisen Kaisha and built by Imabari Shipbuilding, both of them Japanese companies. Indeed, the two are still locked in negotiations with the Egyptian government over compensation payments.

More broadly, it highlighted the vulnerabilities of the Suez route for both the Japanese government and its business community.

Leaving aside the very long route around the Cape of Good Hope in South Africa, Japan has two potential alternatives, both of them reliant on Russia – the Trans-Siberian Railway and the Northern Sea Route.

Indeed, Russian President Vladimir Putin has personally promoted these alternatives.

At the time he was inaugurated for his fourth term as president in May 2018, Putin signed the “Executive Order on National Goals and Strategic Objectives of the Russian Federation through to 2024.”

Among the goals were “reducing the time to ship containers by rail, in particular from the Russian Far East to Russia’s western border, down to seven days, and quadrupling the volume of transit container traffic by rail,” as well as “developing the Northern Sea Route and increasing its cargo traffic up to 80 million tonnes.”

The interest in these routes has been mutual, and the Suez incident led the Japanese side to restate its own ambitions.

Shortly afterwards, Minister of Land, Infrastructure, Transport and Tourism Kazuyoshi Akaba was asked by a reporter to give his thoughts about these alternative routes.

“In regard to the Suez Canal incident, we once again recognise that it is important to secure various means of transportation and to possess viable routes in order to realise stable international logistics,” he said at a news conference on April 6.

He also noted, “We are currently implementing efforts to promote the use of the Trans-Siberian Railway.”

Quicker journeys

It goes beyond statements of intent.

Two years ago, tentative intergovernmental efforts were launched to develop a system for electronic data exchange, cargo tracking, and accelerated customs clearance.

Moreover, Maersk, the Danish integrated shipping company, launched its AE19 service – an ocean-rail transportation service across Russia – in July 2019, and it has quickly grown in scale.

In early March, just before the Suez accident, the shipping firm was promoting the service.

“Being able to offer solutions such as AE19 to our customer base in Japan represents the possibilities that Maersk can bring across many transport modes,” Managing Director of North East Asia Toru Nishiyama said in a news statement. “I am extremely pleased to see our customers’ support, and look forward to making this into a choice for more and more customers.”

With news of the accident in the Suez Canal, Maersk quickly seized the opportunity to increase the frequency of its services on the Trans-Siberian Railway.

Additionally, last December, Hankyu Hanshin Express announced that it would be inaugurating a bi-monthly service that would ship containers, filled mostly with car parts and industrial equipment, by ferry from the port of Toyama on the Sea of Japan to Vladivostok.

The containers would then be loaded onto the Trans-Siberian Railway and sent to a terminal in the Polish city of Poznan.

By utilising this route, transport to Europe could become much quicker. The sea journey through the Suez Canal takes about two months to complete, while the ferry and railway service could complete the task in as few as 20-27 days, according to the company’s pitch to customers.

In mid-April, after the Suez accident, Russian Railways announced the opening of a representative office in Tokyo to further promote the development of the business.

Temple University’s Brown says that during the Soviet era, it was common for Japanese companies to ship to Europe via the Trans-Siberian Railway, so all that was needed now was a modernisation and a revival, rather than the creation of something entirely new.

“The main problem has been cost,” he told Al Jazeera. “It’s not been price competitive with the Suez Canal. Also, there’s the issue of limited volumes.”

Brown believes that the Trans-Siberian Railway has great potential, but also says that issues of corruption and an inefficient Russian bureaucracy remain obstacles.

Melting ice

The final alternative, although it is more of a long-term prospect, is the Northern Sea Route (NSR).

One of the odder impacts of global climate change, with its attendant melting of glaciers along the poles, is that it is increasingly possible to travel from Asia to Europe via the Arctic Ocean.

Currently, this is only a seasonal possibility between June and December, and even then, it requires an icebreaker.

Still, according to Japanese government data, a record 133 ships travelled through the Northern Sea Route during the 2020 navigation season, up from 87 the previous year. Among the successful voyages was an ice-breaking LNG carrier that left the Sabetta port in northern Russia in June to arrive in Tokyo less than a month later in July.

The Suez Canal, in contrast, sees average daily traffic of between 40 and 50 ships a day, according to the Suez Canal Authority.

Russia has been trying to seize on the potential opportunity.

In late March, Nikolai Korchunov, the ambassador for international cooperation in the Arctic, told the media that “it is necessary to think about how to efficiently manage transportation risks and to develop alternative routes to the Suez Canal; first and foremost the Northern Sea Route.”

Nevertheless, Russia still needs to address many practicalities, including a major buildout of the coastal infrastructure.

Brown explains, “If a ship breaks down somewhere along the route, there [need to be] a lot of ports nearby that it can stop at … On the Northern Sea Route, there is basically nothing.”

The cold reality is that neither the Trans-Siberian Railway nor the Northern Sea Route will be feasible replacements for the traditional route through the Suez Canal in the near future.

However, it is perfectly plausible that, with sound management and further infrastructure development, these routes could become viable and reduce the degree of Japan’s dependence on Suez.

As Michitaka Hattori, director of the Tokyo-based Institute for Russian & NIS Economic Studies, put it, “Japan does not need to overcommit [to the Russian transportation routes], but if there are merits and there is room to utilise them, then we should certainly keep an eye on them.”
Source: Al Jazeera

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