Maritime Silk Road as Game Changer for Global Transport

Eromosele Abiodun writes that the Maritime Silk Road initiative promoted by China to develop international shipping connectivity across South East Asia, Africa, Oceania and Indian Ocean will open new markets in global commerce, improve connectivity between modes of transport, enhance speed and efficiency at the ports

Recently, China’s government mapped out an ambitious plan, the Maritime Silk Road Initiative (MSRI), to establish three “blue economic passages” that will connect Beijing with economic hubs around the world. The MSRI is the maritime dimension of China’s Belt and Road Initiative (BRI), which could include $1.4 trillion (N504 trillion) in new roads, railways, ports, and other infrastructure.

According to the Chinese government, the MSRI is intended to increase global integration and boost growth. However, some analysts question China’s motivations, particularly those behind its investments in ports. During the first half of 2017 alone, Chinese companies announced plans to buy or invest in nine overseas ports, five of which are in the Indian Ocean.

Those critical of the MSRI typically argue that while some economic factors may be at play, these investments are driven primarily by strategic objectives. At the heart of this critique is a concern that China will use ports associated with the MSRI to service military assets deployed to the region in support of China’s growing security interests. These concerns have focused on several port projects, including those in Gwadar, Pakistan; Hambantota, Sri Lanka; and Kyaukpyu, Myanma.

The MSRI has its historical legacy that can be traced back to more than two millennia ago when the Chinese, Hindus, and Arabs exchanged goods through maritime sailing. During the Song and Yuan Dynasties, Quanzhou became the largest oriental port, on a par with Alexandria of Egypt.

The Maritime Silk Road refers to the maritime section of historic silk road that connects China to Southeast Asia, Indonesian archipelago, Indian subcontinent, Arabian Peninsula, Somalia and all the way to Egypt and finally Europe, which flourished between 2nd-century BCE and 15th-century CE.

The trade route encompassed numbers of seas and ocean; including South China Sea, Strait of Malacca, Indian Ocean, Gulf of Bengal, Arabian Sea, Persian Gulf and the Red Sea. The maritime route overlaps with historic Southeast Asian maritime trade, Spice trade, Indian Ocean trade and after 8th century—the Arabian naval trade network. The network also extends eastward to East China Sea and Yellow Sea to connect China with Korean Peninsula and Japanese archipelago.

Experts believe the development of port cities constitutes an integral part of multiple international economic cooperation corridors, including the new Eurasian Continental Bridge, China-Mongolia-Russia, China-Central Asia-West Asia, and China-Indo China Peninsula corridors. On the other hand, the hinterland development and its transportation networks are also essential in supporting and sustaining major port cities and areas. Analysts said the belt and road initiative will help realise the free flow of land and maritime economic factors, promote cultural exchange and mix between coastal and inland regions, and facilitate the development of safe and efficient land-and-sea major transportation channels, bringing forth common prosperity for both the coastal and inland population.

As countries navigate through the adjustment after the international financial crisis, experts stressed that they must seize the opportunities of rapidly growing global ocean economy, and establish pivots and corridors for maritime economic cooperation. To achieve the goal, they stressed that countries intensify efforts to promote maritime transportation, resources development, environment protection, scientific research, tourism, archaeology, and port economic zone development.

At an international symposium on maritime silk road of the 21st century, tagged, “Building the Maritime Silk Road of the 21st Century with Open Mind and Bold Courage,” recently, former Foreign Minister and Chairman of China Public Diplomacy Association Mr. Li Zhaoxing said the development of the maritime silk road of the 21st century, are very instrumental in promoting the development of the ocean economy and maritime cooperation among participating countries.

Delivering Results
“In less than a year and a half since the Chinese President Xi Jinping announced the belt and road initiative, China together with its partners are already delivering fruitful results. China has made substantive progress in policy planning and mechanism building. Through series domestic and international conferences, different local regions, the academia, business community, cultural sector, and overseas Chinese communities have all been mobilised to contribute to the initiative. People have expressed high appreciations for the silk road spirit and the proposal of Economic Cooperation Corridor among major economies.

“Over 50 states and the EU, ASEAN, SCO, UN ESCAP and other international organisations have responded positively to the initiative. China has signed the Belt and Road cooperation agreements with Kazakhstan and other states, achieving breakthroughs with partner countries on projects and programs ranging from transport infrastructure to industrial development, and to people-to-people exchange. In addition, the Silk Road Fund has been successfully launched and 26 states have signed up as charter members to establish the Asia Infrastructure Investment Bank (AIIB),” he said.

Compared with the silk road overland, he said the maritime silk road shares similarities but also has its unique characters.

He added: “It has its own set of advantages, potentials, as well as difficulties and challenges. Going forward, I believe the success of the MSRI of the 21st Century would require effective efforts to coordinate our cooperation. To make that happen, we must equip ourselves with an open mind as broad as that of an ocean and muster courage strong enough to brave winds and waves.

“Like the vastness of the ocean comes from its accepting of thousands of rivers, to ensure constant progress under this initiative, China will continue, as we’ve always done, to earnestly heed the opinions and advice and fully consider the interests and concerns of all our partners. We will remain committed to open regionalism, and will refrain from closed blocs and arrangements targeted at the third party.

“We will seek to cooperate with other regional initiatives and mechanisms, and would welcome countries outside the region to actively participate in appropriate ways. In the future, the Belt and Road will foster large numbers of economic and people-to-people cooperation projects. We look forward to the valuable contribution from international organisations, multinational corporations, financial institutions, and non-governmental organisations.”

Opportunity for Africa
Meanwhile, Nigeria may have taken the lead in the drive to ensure that the African continent maximizes the benefits that are imbedded in the MSRI. This is because it is believed the initiative will substantially affect the pattern of global commerce in the near future.

Director-General of the Nigerian Maritime Administration and Safety Agency (NIMASA), Dr. Dakuku Peterside, who is leading the charge told news men last week that the Chinese Belt and Road Initiative, also known as the Silk Road Economic Belt and the 21st-century Maritime Silk Road, will be a game changer for global transport and substantially affect the pattern of global commerce.

Dakuku stated this in Dubai Maritime Summit 2018, which was part of the events at the five-day UAE Maritime Week 2018.

Speaking on the benefits and risks of the BRI, a Chinese government development strategy aimed at enhancing regional connectivity through infrastructure development and investments in Europe, Asia and Africa, the DG urged African and Middle East countries to plan mitigation measures against potential risk elements of the initiative.
He identified the likely risk elements to include trade imbalance in favour of China and Chinese control of trade infrastructure, which will give it a lot of leverage in the global market place.

Dakuku said: “Chinese policy will affect port calls and hub decisions, which may adversely affect ports of Africa and Middle East; Chinese political influence and dominance leading to reintroduction of Sino centric order is imminent; the tanker market will shrink substantially, as pipelines across continents will be the preferred mode of transportation of oil and gas.”
However, he said the benefits of the Chinese economic initiative outweighed the risks.
At the event, the panellists unanimously agreed that the China Belt and Road initiative would open new markets in global commerce, improve connectivity between modes of transport, enhance speed and efficiency at the ports, open new international trade routes, and boost technology transfer.

On the panel to discuss the initiative were Managing Director of Precious Shipping, Khalid Hashim; Chief Executive Officer of King Abdallah Port, Rayan Qutub; Chief Executive Officer of Drewey, Tim Power; and CCO of Abu Dhabi Ports, Ross Thompson.

The Dubai Maritime Summit brought together the maritime sector’s leaders, decision makers, policymakers, high-level government officials, and regional and international maritime industry leaders to deliberate on issues affecting the global maritime industry.

Previous editions included some of the most distinguished local and international guests, such as Secretary-General of the International Maritime Organisation (IMO), Kitack Lim, and UAE Minister of Infrastructure Development and Chairman of the Federal Transport Authority, Land and Maritime, H.E. Dr. Abdullah Belhaif Al Nuaimi.

The belt and road initiative is the signature policy of Chinese President Jinping. The basic idea behind it is to boost trade and economic integration among the countries in the initiative through investments in roads, pipelines, ports, communication networks and other such infrastructure that promotes connectivity.

The Dakuku-led administration of NIMASA has continued to collaborate with other maritime nations to transform and bring Nigeria’s maritime sector to international limelight, so that it can compete favourably with those of other countries.

Peterside had at a separate forum recently charged African governments to protect economic their interest to ensure that the people of Africa benefits from the wealth of the continent.
Peterside who was speaking as the chairman of the 29th annual session of club of ports of the Crans Montana forum currently ongoing in Brussels, Belgium said that the maritime silk roads come with a lot of benefits for the continent.

He, however, charged African countries to be strategic in decision making in order to reap the rewards and avert some perceived risk inherent in the initiative.

According to him, “Whereas China is pursuing new transportation linkages throughout the Eurasia region and Africa to boost trade and enhance her economic status; Africa must key in to develop her port infrastructure, maritime assets financing and create jobs for her people.”

Speaking further, the NIMASA boss listed potential threats such as likelihood of ports being taken over by the Chinese to the detriment of Africans noting that the maritime Silk Road initiative will create opening for African markets to be flooded with Chinese goods.
Peterside, also said that as a result of the China driven initiative, Chinese policy may also affect port calls and hub decisions. He warned that the oil tanker and gas markets will be affected by the construction of new pipelines that will connect Africa to China which will engender Chinese political dominance in Africa if not carefully managed.
The NIMASA boss further advocated the support of the China led maritime Silk Road initiative but charged Africa to do the needful to ensure her economic interests is fully protected.

Effective Intermodal Connectivity
Peterside stressed the importance of effective intermodal connectivity to port efficiency.
He stated that good port-city linkage systems would facilitate seamless transport and create immeasurable positive effect on the economy.

Also, he noted that the quality of the rail and road transport connection to a port has an impact on the cargo throughput of the port.

He said: “The efficiency of a port is measured by the average quantity of import and export cargoes it is able to handle in a single day. A port with bad road and rail facilities will have low cargo throughput, all other factors remaining equal. While ships start and end their journey in a port, the cargoes in most cases originate and end up far from the ports. This in effect implies that without the connection of other modes of transport to a seaport especially rail and road transport, the port becomes crippled and the sea transport becomes inefficient.”

While noting that some port managements, particularly in developing countries do not still understand the level of impact an effective intermodal connectivity has on the efficiency of their ports, the NIMASA DG pointed out to the international audience that Nigeria under the current leadership of President Muhammadu Buhari through the Federal Ministry of Transportation is investing heavily on linking all major sea ports and airports to the cities through rail and good access roads to further boost the economy.

In his words “The Nigerian Government under the leadership of President Buhari is investing heavily in using rail to link both the seaports and the airports to all major cities in the country. Our quest to enhance the quality of the rail and road transport connection to all ports in Nigeria is to ensure seamless transportation of goods and services through the ports.”
Peterside opined that the turnaround time in most African ports is too high because of the inefficiency and lack of necessary port infrastructure which leads to longer dwell time for vessels and cargoes in the ports.

He said that the resultant effect is high demurrage, which is eventually passed over to the final consumer.
Speaking further he noted that while transport cost adds between 2 to 5 per cent to the final cost of imported cargoes in developed countries, it is as much as 15 to 50 per cent in developing countries.

He charged port managements in other developing nations to invest in effective intermodal connectivity to enhance their port operations, adding that an efficient land transport system will ensure vessels idle time in the port is highly minimised thereby reducing the turnaround time of vessels as well as increasing the berth occupancy ratio of the port to make it more competitive and more profitable.