The Rise of the North-South & South-South Trades
It is a hardly contentious matter that the latter view is popular with many of the underdeveloped Eurasian and African states, even given their acknowledgement of the risks. The stated aspiration of the 'Belt & Road" proponents & supporters is that they seek to bring shared economic growth through infrastructure & consumer market development.
The aforementioned line espoused by the Shanghai Cooperation Organisation seductively espouses intra-regional trade growth being kick-started with capacity building, and finished as consumer market demand. It is ranked by the major Eastern powers – in rhetorical terms while addressing their audience abroad - on the same level as the exploitation of the resource extractive trades, and the backdoor security element, which are otherwise commonly held geo-strategic concerns of the founding SCO members.
While the above may sound overtly political, the usefulness in stating it when examining supply chain matters is hardly controversial. Within less disturbed corners of Eurasia such intra-regional trade growth is also extant, as noted earlier.
So far, this cited growth is largely in the intra-East Asian trades, but it is in this vein that the ambitious Eurasian developmental proposals – those employing the Silk Road labels - seek to follow. From the port and container ship perspective, we note that the bigger-the-better scenario is still cited in the size of ships being brought into the trades. To an extent this is natural due to these ships often those being displaced from larger trades by the new mega container ships being brought into service in the east-west trades. It is also natural because these are mainly already developed ports that have served such trades for decades.
More interesting is the future course of development for the less-developed Eurasian countries, the direction of which is yet to be set in stone. The choice of whether these ports should be developed as spoke-ports and reliant on feeder vessels, or as ports that serve ships with direct sailings to other intra-regional markets is the more interesting one.
It may sound logical that it is likely that both feeder and direct call growth scenarios will be pursued at once in new port developments but this is likely limiting in terms of maximising the infrastructure spending resource available.
The direction I am heading for, from the above, is to discuss the overall trade infrastructure developmental possibilities, those that may best serve regional economic and trade growth. In the first instance we should recognise that ports and port efficiency is often cited as being at the heart of the matter. The second less-cited thing is that port viability is in all markets dependent upon inland transportation capacity, economics, and service quality.
Interesting scenarios are arising on one side and the other of southern Eurasia along these lines. In the east in Vietnam we have many extant smaller ports and terminals; and nearby the Persian Gulf, we have the under-developed ports of Chabahar in Iran, and Gwadar in Pakistan.
It is interesting to start from the perspective taken by others when viewing the infrastructure development situation for Vietnam’s ports and trades. Below we link a representative western critique that prioritises today’s dominant East-West trade in respect of Vietnam’s comparative viability, over the regional growth scenarios readily acknowledged elsewhere. This view is strong on growing local Vietnamese ports in order to handle larger ships but presents few complimentary insights on the opinion’s compatibility with hinterland infrastructure and accessibility. www.business-in-asia.com/ports_in_vietnam.html
The following report from Voice of Vietnam news says: “In the last decade China has consistently been Vietnam’s biggest trade partner and second biggest importer, after the US.” http://vovworld.vn/en-US/Current-Affairs/Strengthening-VietnamChina-relations-for-stable-and-healthy-growth/324737.vov
With most Vietnamese merchandise exports to the US hubbing over Chinese ports, the current paradigm is undoubtedly relatively better for the two-way trade efficiency between China and Vietnam; and it provides a comparative advantage for Chinese exporters over those of the US exporters to Vietnam. It is natural then for US business to promote the case for port growth that would support direct calls of the larger ships employed in the Pacific Trades.
However, the big port infrastructure proposals advanced by the west are logically hamstrung in Vietnam by hinterland supply chains that often require transhipment over smaller coastal ports in any case. Further, it isn’t feasible in the greater developmental scheme of things for Vietnam to introduce any additional bias toward near-major-port industrial production. It is also not just a simple matter of switching the prospective steepest trade growth expectations to China or Russia, either, as the recently recorded 12% growth rate between Vietnam and Malaysia attests. www.talkvietnam.com/2015/03/vietnam-malaysia-record-trade-growth/
At the other end of our cited Eurasian theatre, in Iran & Pakistan, the opportunities for trade development that would connect non-Eurasian traders with Eurasian heartlands to the north-east by rail is an enticing prospect. www.dredgingtoday.com/2013/10/14/iran-pmo-introduces-chabahar-port-development-plan/
It appears unlikely that any optimised infrastructure projects for either the development of Chabahar, Gwadar, or the Vietnamese ports, will be ones influenced primarily by the recent past trends toward building mega-ports, those that in the first instance seek to serve mega-ships.
And from this point I close part three of this series with the suggestion that – in the greater scheme of things - the ports, the trades, the ships, and the way the logistical assets are utilised, are headed toward a sea-change.