Sunday, September 8, 2013



American Admiralty Books Safety & Privacy Policies   EU VISITORS WARNING POSSIBLE COOKIES AHEAD

The first Chinese cargo ship to transit the Northeast Passage above Russia ended her voyage in the Fall of 2013. The Yong Sheng (19,000 gross tons)  reached Rotterdam  just 21 days after leaving Busan, South Korea. She was carrying a cargo of steel and industrial machinery. COSCO Shipping, China's state owned shipping company hopes that global warming will make the route a regular seasonal option in ship routing. It would have taken a lot longer to have gone the usual way around and during the voyage of the YONG SHEN her sister ship the COSCO ASIA was attacked in the Suez canal. 


So the "Northern Route" as it is called shaved two weeks off the voyage and avoided an area endangered by political unrest. Reportedly most of the voyage was ice free. But ice breaking was required of about a day's duration at one point. The route parallels the Russian coast often within Russian territorial waters and rarely, if ever, outside of the Russian EEZ. Ships that use the route will need Russian permission and Russian provided services such as ice breaking and vessel traffic control at choke points. No one knows what Russia may eventually charge for the necessary services. China is already complaining over probable pricing. However as we noted when we looked at Canada's yet to be completed High Arctic naval refueling station, costs to produce services are high in the High Arctic. We don't think Russia or anyone else can provide shipping services up there at bargain basement rates. 


By the way the first ship to transit the passage did so around 1660. We weren't keeping meticulous weather records back then but the actual history of ships that have made it tells us that these relatively ice free summers have occurred before over the last 500 years, but only recently in the last 100. Anyone investing heavily in shipping infrastructure or services for the High Arctic had better be prepared for at least the occasional lost season due to a cold winter. Don't bet the corporate farm on the Al Gore prediction of climate change. But if the Al Gore model holds true the Dragon wants to be the dominant merchant shipper through the region and seems willing to invest with Arctic coastal states on shipping infrastructure and services. 

 We described recently the stake that China has carved out for itself on the Al Gore model in terms of redirecting smoke stack industries their way from the West. We described how 3 D printing and related technologies are going to make them the rust belt of mid century. But China is a centrally planned authoritarian state. It is moving lock step towards its own demise from poor long term business decisions, but for the time being looks like the economic power to beat in the 21st century. In the eyes of the old pirates who run this book shop we think China has drunk the wrong cool aid and sown the seeds of her own demise and won't be able to turn it around when disaster becomes manifest ahead. We think non centrally planned and poorly governed economies like those of the West just muddling through today will emerge at the top of the pack at mid century. They have already amortized their rust belts, and are in the middle of the types of currency and employment issues that China has yet to face. If China's government continues down its centrally planned crony capitalistic , authoritarian ways when it reaches these events we can be pretty sure of ham handed and thoroughly ineffective management of the crisis and China is back to back water status . The Commies may or may not stay in power, but the real problem is that China is a Confucian society and therefore leans towards authoritarian structure the Commies are just the latest in a long line of basically Confucian governments. The reptile may lose a fortune on ice but will have its glory days first while the Arctic coastal states take it slow and plead poverty and accept Chinese financial help. Big lizards that venture on ice should beware the Arctic Fox.


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