{"id":86182,"date":"2024-03-28T10:57:10","date_gmt":"2024-03-27T23:57:10","guid":{"rendered":"https:\/\/www.aspistrategist.ru\/?p=86182"},"modified":"2024-03-28T10:57:10","modified_gmt":"2024-03-27T23:57:10","slug":"war-risks-to-australian-maritime-trade","status":"publish","type":"post","link":"https:\/\/www.aspistrategist.ru\/war-risks-to-australian-maritime-trade\/","title":{"rendered":"War risks to Australian maritime trade"},"content":{"rendered":"
<\/figure>\n

If push comes to shove between China and the United States, Australia\u2019s international trade with Asia is at risk of becoming collateral damage.<\/span>\u00a0<\/span><\/p>\n

The sea routes through Indonesia and to Asia around the east of Papua New Guinea account for 90% of Australia\u2019s sea-borne exports and 83% of its imports.<\/span>\u00a0<\/span><\/p>\n

Last year\u2019s <\/span>Defence Strategic Review<\/span><\/a> identified the defence of trade routes as a priority. Australia was at little risk of invasion, but adversaries could exercise military coercion at a distance by targeting Australia\u2019s trade, it said.<\/span>\u00a0<\/span><\/p>\n

A new ASPI Special Report, <\/span>The trade routes vital to Australia\u2019s economic security<\/span><\/i><\/a>, identifies the narrow shipping channels through Indonesia as the most vulnerable choke point for Australia\u2019s trade.\u00a0They carry about two-thirds of Australia\u2019s exports, including all its iron ore and most of the west-coast liquefied natural gas, while they are also the route for 40% of our imports.<\/span>\u00a0<\/span><\/p>\n

The Malacca Strait between Indonesia and Malaysia is the main route for shipping from the Indian Ocean trading with Asia.\u00a0It carries about 80,000 ships a year. If it were blocked\u2014and it\u2019s only about 15 kilometres wide alongside Singapore\u2014all that shipping would be rerouted around the south of Australia, travelling past the east of Papua New Guinea.<\/span>\u00a0<\/span><\/p>\n

The Malacca Strait is used by most container and vehicle ships coming to Australia from Europe, although since the attacks by Houthi militia in the Red Sea more are travelling around South Africa\u2019s Cape of Good Hope and directly across the Indian Ocean.<\/span>\u00a0<\/span><\/p>\n

The route to the east of Papua New Guinea is taken by most container ships coming to Australia from North Asia and also Australia\u2019s coal ships supplying Asia.<\/span>\u00a0<\/span><\/p>\n

Once ships from Australia reach North Asia or pass through the Indonesian archipelago, they enter the busiest shipping lanes in the world.\u00a0The ships carrying Australia\u2019s bulk commodity exports are a significant presence: it\u2019s estimated they account for 29% of global bulk shipping, however the 8 million containers handled each year at Australia\u2019s ports are less than 1% of the global total.<\/span>\u00a0<\/span><\/p>\n

The report notes that while Australia\u2019s trade would be seriously damaged by any blockage of the Indonesian shipping channels, so too would the trade of China.\u00a0China depends on maritime imports for 80% of its iron ore, 70% of its oil and 35% of its protein.<\/span>\u00a0<\/span><\/p>\n

US strategic analysts have explored the option of a distant blockade of China\u2019s maritime trade using the Malacca Strait to interdict commercial shipping.<\/span>\u00a0<\/span><\/p>\n

However, international trade has a proven resilience in the face of military disruption.\u00a0While the Houthi attacks since October have halved the flow of ships through the Suez Canal, they have had little measurable effect on global trade flows.<\/span>\u00a0<\/span><\/p>\n

Ukraine is managing to ship high volumes of grain and other goods across the Black Sea in the face of Russian attacks by devising a route that hugs its coast and then the coasts of NATO members Romania, Bulgaria and Turkey.\u00a0It has been helped by the British government subsidising war-risk insurance.<\/span>\u00a0<\/span><\/p>\n

Military defence is important: Ukraine\u2019s resumption of shipping through the Black Sea following the collapse of a UN-brokered grain-shipping deal with Russia has been helped by Ukrainian attacks on Russia\u2019s navy.<\/span>\u00a0<\/span><\/p>\n

However, it is essentially the prospect of profit that keeps the merchant fleet moving.<\/span>\u00a0<\/span><\/p>\n

The availability of alternative sea-routes is one source of the resilience of trade: if one channel is blocked, there is usually another way around it.\u00a0The provision of war-risk insurance is another. Ship owners and operators will weigh the cost of insurance against the expected profit from the trip.<\/span>\u00a0<\/span><\/p>\n

The competition between shipping lines is also important. The oil tanker business is hugely competitive: the top 30 companies control less than half the global capacity.\u00a0The operators of a ship that turns down a cargo because the route is too risky can be sure that a competitor will pick it up.<\/span>\u00a0<\/span><\/p>\n

Bulk shipping is even more competitive, with the top 20 companies operating barely a quarter of the global fleet.\u00a0Container shipping is a lot more concentrated, with the top five companies accounting for two-thirds of global capacity.<\/span>\u00a0<\/span><\/p>\n

Container ship operators were quick to stop using the Suez Canal after the Houthi attacks began, with traffic at the end of January down by two-thirds from a year earlier. The cost of the detour around Africa was passed on to customers.<\/span>\u00a0<\/span><\/p>\n

In the much more competitive oil tanker business, traffic was only down by 18%, while for bulk shipping the fall was only 6%, according to analysis by the <\/span>UN Conference on Trade and Development<\/span><\/a>.<\/span>\u00a0<\/span><\/p>\n

The ASPI report calls for the Australian government to review the security of Australia\u2019s container shipping supply, noting that the country has the advanced world\u2019s highest dependence on manufactured imports, most of which arrive by container.<\/span>\u00a0<\/span><\/p>\n

Australia is a high-cost route for the container lines, as it has relatively low volume, is not on the way to anywhere else, and up to half the containers that arrive in Australia full leave empty.<\/span>\u00a0<\/span><\/p>\n

There has been no official review of Australia\u2019s shipping routes since one was conducted by the forerunner of the Bureau of Infrastructure and Transport Research Economics in 2007, which was based on data from 2001 to 2004.\u00a0The direction of Australia\u2019s trade has changed dramatically since then, and the ASPI report calls for the government to fund an update of the official report.<\/span>\u00a0<\/span><\/p>\n

The ASPI report also says the government should prepare contingency plans for supporting the provision of war-risk insurance to ships trading with Australia in a time of conflict. There should also be planning for emergency chartering of shipping.\u00a0The provisions in the Defence Act for requisitioning shipping in war-time were drafted in 1903 in the wake of the Boer War and need to be updated.<\/span><\/b><\/p>\n","protected":false},"excerpt":{"rendered":"

If push comes to shove between China and the United States, Australia\u2019s international trade with Asia is at risk of becoming collateral damage.\u00a0 The sea routes through Indonesia and to Asia around the east of …<\/p>\n","protected":false},"author":955,"featured_media":86185,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"footnotes":""},"categories":[1],"tags":[1314,1580,318,365],"class_list":["post-86182","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-oil-trade","tag-resilience","tag-shipping","tag-trade"],"acf":[],"yoast_head":"\nWar risks to Australian maritime trade | The Strategist<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.aspistrategist.ru\/war-risks-to-australian-maritime-trade\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"War risks to Australian maritime trade | The Strategist\" \/>\n<meta property=\"og:description\" content=\"If push comes to shove between China and the United States, Australia\u2019s international trade with Asia is at risk of becoming collateral damage.\u00a0 The sea routes through Indonesia and to Asia around the east of ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.aspistrategist.ru\/war-risks-to-australian-maritime-trade\/\" \/>\n<meta property=\"og:site_name\" content=\"The Strategist\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/ASPI.org\" \/>\n<meta property=\"article:published_time\" content=\"2024-03-27T23:57:10+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.aspistrategist.ru\/wp-content\/uploads\/2024\/03\/GettyImages-1755007161-scaled.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"2560\" \/>\n\t<meta property=\"og:image:height\" content=\"1707\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"David Uren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@ASPI_org\" \/>\n<meta name=\"twitter:site\" content=\"@ASPI_org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"David Uren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.aspistrategist.ru\/#website\",\"url\":\"https:\/\/www.aspistrategist.ru\/\",\"name\":\"The Strategist\",\"description\":\"ASPI's analysis and commentary site\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.aspistrategist.ru\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-AU\"},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-AU\",\"@id\":\"https:\/\/www.aspistrategist.ru\/war-risks-to-australian-maritime-trade\/#primaryimage\",\"url\":\"https:\/\/www.aspistrategist.ru\/wp-content\/uploads\/2024\/03\/GettyImages-1755007161-scaled.jpg\",\"contentUrl\":\"https:\/\/www.aspistrategist.ru\/wp-content\/uploads\/2024\/03\/GettyImages-1755007161-scaled.jpg\",\"width\":2560,\"height\":1707,\"caption\":\"Three large ships loading iron ore in an outback port. 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