Hope for safe sea transport in 2024 on the route around the Cape of Good Hope

By Marek Grzybowski

In 2023, two major gateways connecting global markets failed. The passage through the Panama Canal in 2024 will, as announced, accommodate ships with a shallower draft. The region around the Suez Canal has become dangerous again and there is no indication that it will be safer in 2024 than at the beginning of 2023. And this also means challenges for Polish producers, forwarders, logisticians and cargo handlers.
Polish trade with Asian markets may depend on an efficient route around the Cape of Good Hope. In its latest weekly shipping lane report, Intermodal said that “as 2023 ends, the global shipping business faces significant challenges from environmental and geopolitical issues affecting the Panama and Suez Canals.”
Global logistics is experiencing another shock after the Covid pandemic and Russia’s invasion of Ukraine. Once again, we need to modify websites and change cruise schedules, as well as change calculations and supply chain plans, revise the “just in time” concept, and adjust inventory plans and production projections.
Obstacles have arisen at key sea connections, forcing maritime transport operators to seek a return to the routes used to conquer the world by Ferdinand Magellan, Vasco da Gama, and James Cook. Will we have to travel around the world in 80 days again?

From hyperglobalization to polyglobalization
– Disruptions on leading connections lead to disruption of globalization and production chains. We are moving from hyper-globalization to poly-globalization, suggests Rebecca Grynspan, Secretary-General of UNCTAD, referring to the concept developed by Dani Rodrik from Harvard University.
– In a world full of cascading crises, geoeconomic fragmentation, slowing economic development and climate change, maritime trade is like a stabilizing drift (a ship in a storm), protecting the global economy from turbulent currents of disruptions – wrote Rebecca Grynspan in November on the occasion of the publication of the latest report UNCTAD regarding maritime transport.
Today it is known that global trade decreased by approximately 5% in 2023 compared to record turnover in 2022. According to UNCTAD forecasts from November this year. Maritime trade volume will continue to grow in the coming years: 2.4% in 2023 and 2.1% in the next five years. This optimism is not shared by all operators. In the December study, the forecasts are more cautious.

The forecasts are generally pessimistic
UNCTAD notes that “Looking ahead to 2024, global trade forecasts remain highly uncertain and generally pessimistic.” This is justified by observations from late 2023: “While some economic indicators point to potential improvement, persistent geopolitical tensions, high debt levels and widespread economic instability are expected to have a negative impact on global trade patterns.”
Statistics from the Panama Canal Authority show that in 2021, the Panama Canal provided conditions for the transit of approximately 291.7 million LT of cargo and approximately 294 million LT in 2022. However, in 2023 there was a breakdown due to the development of open-pit mines and drought. This led to a decline in cargo transit to approximately LT 285.7 million.
– Blockages in the Panama Canal have severely disrupted U.S. grain trade. Forwarders, especially those transporting crops to Asia, now have to look for longer routes, e.g. around South America, Africa or through the Suez Canal – informs Chara Georgousi, market research expert at Intermodal.

Extended logistics chains
With the introduction of sanctions against Russia by the EU and other countries, the logistics of crude oil, refinery products and gas have changed radically in many cases. Delivery routes have become longer and charter costs have increased. At the expense of changing sources of supply and increasing supplies by ship, Europe has built energy security on the basis of alternative energy supplies.
In 2023, grain delivery routes were also extended. Ships traveled longer distances than before. The total costs of delivering Ukrainian grain to target markets increased by the additional costs of land transport and reloading in foreign ports. For this reason, several grain importing countries had to switch to alternative sources of grain supplies. Instead of grain from Ukraine, they buy it from the USA or Brazil. And this requires longer transports across the Atlantic.
Only in linear container ship services did operators shorten average distances. This is the effect of poly-globalization and defragmentation of production in a group of Asian countries. Manufacturers from China, avoiding American restrictions and looking for cheaper production markets, are moving production to neighboring countries in East Asia.
The Suez Canal is important for Poland. About 22,000 flow through it annually. ships with containers, oil, gas, grain and other bulk cargo. Energy raw materials and components for the production of final products destined for the European Union market reached the ports of Gdańsk and Gdynia, Szczecin and Świnoujście through the Suez Canal. Ro-ro and general cargo ships with products from Asian countries, including weapons for the Polish army, pass through here.
The Polish economy is connected with Asian markets by linear ocean connections through the Baltic Hub in Gdańsk. They are served by mega container ships. The Port of Gdynia is also prepared to receive large ships with containers, with two container terminals.

Ports and the Suez Canal – strategic links of Poland – Asia trade

It should be emphasized that Poland’s trade turnover with Asian countries is constantly growing. And in both directions. We import goods worth over EUR 3.5 billion a month from China, and we export about 10% of this value. Goods worth approximately PLN 146.6 billion reach Poland from China. We export goods worth almost PLN 13.25 billion. Almost all trade in goods takes place mainly through Polish ports.

Trade turnover between Poland and the Republic of Korea in 2022 reached the value of approximately USD 9 billion (excluding the value of weapons). Goods worth approximately USD 7.9 billion were delivered to Poland. Poland was the third largest recipient of Korean products in the EU. From Poland, we delivered goods worth close to USD 1.1 billion to Korea, mainly by sea.
In 2022, the value of exports of goods from Poland to India exceeded USD 1.25 billion, while a year earlier it was approximately USD 900 million, and in 2020 – USD 520 million. In 2022, imports from India exceeded USD 3.7 billion and were higher than in 2021 (USD 2.47 billion) and in 2020 – USD 1.66 billion.
Polish companies exported goods worth over USD 462 million to Vietnam in 2022. It was $37 million more than in 2021. In 2022, the Polish market absorbed goods worth over USD 4.4 billion from Vietnam. In this case, the value of imports was higher by over USD 1 billion. than in 2021.
The importance of security on the Suez Canal route increased when a long-term arms supply contract was signed with the South Korean government. Extending the supply chains of equipping our army with complete weapons and parts for troops and weapons factories is a significant threat to the military security of our country. The breakdown of logistics on sea routes with Asia may have unpredictable, or even predictable, negative consequences for Poland.
The situation on the main ocean communication routes shows that our ports are indeed of strategic importance, although not everyone is still convinced of this. Investments in new terminals in Gdańsk, Gdynia and Świnoujście are necessary to maintain Poland in an efficient economic and military logistics network.
The low capacity of the Panama Canal means that there is virtually no cheap alternative connection between Poland and Asia. And we have no choice but to ensure the operation of the Polish economy, we must maintain sea transport connections with Asian markets. This is practically only possible thanks to the route through the Suez Canal. What if threats in the region persist? This is all hope for maritime transport around the Cape of Good Hope.