South China Sea tension rises

Any plan Bs international logisticians may have for dealing with disruptive political events in the South China Sea should be re-examined for their resilience as events in that sea took a turn for the worse in late January. 

Having spent considerable sums illegally developing and militarising shoals, reefs and atolls in the Spratly and Paracel islands since 2013 China has just passed a new law that for the first time explicitly allows its coastguard to fire on foreign vessels around these islands, said to be rich in oil an gas reserves. It has also sent its coastguard to chase away fishing vessels from other countries, sometimes sinking them. The law allows the coastguard to use "all necessary means" to stop or prevent threats from foreign vessels. The law also allows coastguard personnel to demolish other countries' structures built on Chinese-claimed reefs and to board and inspect foreign vessels in waters claimed by China. 

Responding to international concerns, the Chinese foreign spokeswoman, Hua Chunying, said the law is in line with international practices and needed to guard China's sovereignty, security and maritime rights, despite the Permanent Court at the Hague ruling against China's so-called Nine Dash Line claiming about 90% of the South China Sea, through which about two thirds of world trade passes, worth over US5 trillion each year. China has indicated that it has no intention of respecting the Court's ruling.

Brinkmanship rises 

On January 23 China cranked up the tempo when it sent a large group of bomber and fighter jets into Taiwan's air defence zone near the Pratas Islands. On the same day, America sent a carrier group headed by the USS Theodore Roosevelt into the South China Sea to conduct routine operations "to ensure freedom of the seas, build partnerships and foster maritime security," said the fleet's rear admiral Verissimo, adding "it is vital that we maintain our presence and continue to promote the rules-based order which has allowed us to prosper."

Losing face in the Chinese psyche is akin to committing hara-kiri, a mindset that like a fever in the blood can ignore powerful economic reasons to steady the boat in the interests of all parties. China will continue to probe with its military might, testing the resolve of others, and its recent history of success, as when it bayonetted its way to Lhasa when the international community just indignantly huffed and puffed in response, leaves no cause to be unworried. Yet, the matter may be resolved without man's proposes, for just as man proposes Nature disposes. 

China's illegal artificial islands are badly exposed to the frequent threat from regular typhoons and tsunamis, with the latter deriving from megathrust earthquakes generated by the Manila Trench. These could easily overwhelm such low-lying islands. Longer term, global warming's cause of rising sea levels combined with huge wave surges will leave much of China's densely-populated coastal cities at grave risks. China's wealth would be better spent here than in military threats, but when politics clashes with economics the former usually wins to the harm of the people.   

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                                                     USS Theodore Roosevelt exercising

                                                     its "rights of passage" in the South

                                                     China Sea.

Container ship insurers ignoring the warning signs?

Since my last blog in December on the growing problem of container ship sizes chasing the economies of scale ("Container ship sizes need rethink") the problem has been emphasised by more worrying container losses at sea, which now far exceed the average annual loss of 778 over the three-year period 2017-2019. On January 16 the 13,100 TEU-capacity Maersk Essen, on route from China to Los Angeles, lost 720 containers in severe weather. This comes only one month after the ONE Apus lost 1,816 containers overboard, also after hitting stormy weather on a similar Pacific voyage.

Evidently insurance companies have become complacent over containers lost at sea because they represent less than 1,000th of 1% of the roughly 226 million sea-borne containers transported in 2019. While it is true that such losses can be diminished by toughening up on cargo securing equipment and practices, et al, marine insurers are now worried that more action is needed to reduce container stack heights but are they oblivious to the signs blowing in the wind? If growing container ship sizes of 20,000+ TEU containers combine with climate changes' taste for more and greater storms abetted by rogue monster waves, believed to be the major cause in many such mysterious losses with all hands, then the marine insurance market must expect much diminished reserves to come.

About two thirds of the world container ship trade passes through the South China Sea, an area highly prone to typhoons and earthquake-generated tsunamis. The latter can generate waves over 100ft high, leaving container ships at high risk of capsize. Such waves are also quite able to punch a hole through both sides of the hull. The total loss of a 20,000 TEU container ship with, perhaps, many smart mobile 'phones on board could easily run to well over £10 billion losses.

If the marine insurance industry does not call time soon on the unwise pursuit of ever-bigger container ships chasing the economies of scale then they will have only themselves to blame for the inevitable mega losses to come, especially as they should have the same concerns for mega cruise ships also drunk on the lure of economies of scale

 

The Maersk Essen loses 720 containers to Davy Jones' bosom

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