The BBC has been covering the impact of the global economic downturn on the shipping industry from the perspective of a shipping container called simply The Box. It is a worm’s eye view of the global economic system, something I myself witnessed when I worked as a bunker agent in the ports of central Japan. The project will last one year.

Track its location and see the videos so far:

The Box gets painted

The Box ready to start journey

BBC Box arrives in Shanghai

The Box unloads in Shanghai

BBC box leaves Greenock

Shipping ports face economic storm

New cargo for the Box

If you become a fan, here’s a papercraft version of The Box you can make and display for all to see.

Via boingboing.net

With the high profile abduction of a French Yacht earlier this month, it seems the fun never stops off the coast of Somalia, if by fun, you mean piracy. According to the AFP,

A major Japanese oil tanker was damaged Monday in a chase by heavily-armed pirates off the coasts of Somalia and Yemen but no one was injured, officials and crew members said. The attack came a day after a Spanish tuna fishing boat carrying a crew of 26 was seized by pirates in waters off Somalia, which has not had an effective central government for more than 17 years.

With attacks like this seemingly increasing, or at least their publicity increasing, it seems unusual that more coordinated efforts are not being proposed to deal with at least this one problem area. While piracy is indeed nothing new, its impact on global trade and security is a large one. With that in mind, I pose the following questions:

1) Will the proliferation of security companies and the outsourcing of security extend to maritime security?

2) Will the US Navy’s unparalleled role in policing the seas ever get the recognition and appreciate it deserves?

3) Will other countries finally chip in navally, or at least financially or is it not yet financially worthwhile?

While many analysts have noted nightmare scenarios like attacks in the Strait of Hormuz or of Malacca by terrorists, is it not equally likely, or at least plausible, that a similar scenario could occur due to piracy (although the ultimate effect would be unintentional)? With rising energy costs raising the cost of transportation and thus the goods which are transported, when will it make financial sense to do more? Are there any coordinated international efforts to police the seas? This is Younghusband territory, and with that, I hope he and readers can chime in.

The US Supreme Court is currently hearing arguments regarding the New Jersey-Delaware LNG terminal dispute previously covered at the blog here. The dispute centers on a proposed LNG terminal that energy giant BP wants to build on the Jersey side of the river.

Delaware has refused to authorize the construction of a 2,000-foot-long pier, which would be built on part of the river bottom that belongs to Delaware. Once again, here’s the map:

The arguments:

New Jersey: Yes, Delaware owns the land. But says a century-old agreement allows each state to control piers on its side of the river. A pier on the New Jersey side that can’t stretch onto Delaware territory to reach the main shipping channel is worthless, that’s where the ships are.

Delaware: Decisions on what to build on Delaware land belong to Delaware. Boundaries matter. And on a practical level, Delaware has only twice in 160 years denied permission to build a pier on the Jersey side of the river and both instances involved LNG facilities, for which the state has safety concerns.

A court-appointed special master concluded earlier this year that
Delaware has the authority to block the pier. Justice Stephen Breyer is not taking part in the case because he owns BP stock, raising the potential of a 4 to 4. A tie often means that a lower court ruling is upheld, but disputes between states are decided by the Supreme
Court in the first instance. What happens in the case of the tie? There’s no precedent, and in this case, we may just find out.

An editorial in the Jakarta Post lambasts the Indonesian government over its obstinate policies for protecting the Malacca Strait.

While we fully support the sovereignty of the three countries [Indonesia, Malaysia and Singapore], we also want to remind them that all stakeholders in the strait have the right to play a role in ensuring the safety of this vital waterway. Major Asian economic powers like Japan and China want more of a role in patrolling the waters, because they depend on the strait for the transportation of commodities like oil and gas. … Indonesia can not simply claim sovereignty and reject any foreign presence in the strait, especially when it remains the main base for pirates there and has so far failed to ensure safe passage through its waters.

Via EagleSpeak who also reports on the Indian navy’s attempts to jointly protect it’s sea-lanes.

Kazakhstan’s Nursultan Nazarbaev, recently made president for life, proposed a new canal linking the Caspian with the Black Sea. Currently, goods flow through the Volga-Don shipping canal, which links the Volga to the Don. It runs from near Astrakhan, Russia on the northwestern shore of the Caspian to Rostov on the Sea of Azov. Claiming it would be up to 1,000 kilometers (621 miles ) shorter than the present route. Given that the route would lie entirely in Russia, it is unlikely to gain support from any Western power. While Central Asia indeed needs to diversify its energy delivery routes, diversify has usually meant avoiding Russia, now seen as unreliable by Europe and the south Caucasus.

With the steadily increasing flow of Central Asian energy outwards, new transit routes are opening and being fought over. This is nothing new, but despite the fact that pipelines are what usually make the news, ports, shipping routes and roads are just as important and as Russia is the world’s largest country, it wants to ensure that these new strategic links pass through its own territory. Unlike Saudi Arabia, Iran, Nigeria and Venezuela with easy access to the open sea, Central Asia is landlocked, to the great benefit of its northern neighbor. As The Hindu notes:

[...] It has been making major investments to refurbish its domestic transport infrastructure and is rapidly developing its ports along the Caspian Sea coast. It is also modernising its rail and road network to enable efficient transfer of cargo towards Moscow, Warsaw, Berlin, and Rotterdam. Russia already has a well-developed rail network that connects its Black Sea and Caspian Sea ports. Consequently, it can handle large volumes of cargo sourced from Asia, without worrying too much about congestion at its ports.

One potential starting point could be near Makhachkala, a fast developing Russian port on the Caspian.

Russia has been developing the ports of Makhachkala, Lagan and Olya energetically. Located strategically on the western Caspian coast, Makhachkala is the capital of Russia’s Dagestan province. It plays a vital role in connecting Russia with the Central Asian republics of Turkmenistan and Tajikistan. A regular ferry service capable of handling heavy cargo connects Makhachkala with Turkmenistan’s eastern Caspian port of Turkmenbashi. From here, a rail line passing through a large segment of the Turkmenistan’s Karkum desert extends further east towards Dushanbe, the Tajik capital. A ferry service from Makhachkala also makes regular runs to Kazakhstan’s rapidly developing Caspian port and oil terminal of Aktau. Makhachkala port has emerged as an important terminal for transferring Caspian oil to Novorossiysk straddling the Black sea.

Yet, all of this comes in addition to the recent failure of America and Europe to secure energy routes bypassing Russia. In May, Kazkah President Nazarbaev backed out of planned talks in Krakow for increased cooperation in transporting Central Asian energy via the Caucasus, Turkey and the Balkans into Europe. He showed up the next day with the presidents of Turkmenistan and Russia to ink deals expanding an existing pipeline around the northern coast of the Caspian and

In addition to the Prikapiisky deal, the three states also signed an earlier declaration with Uzbekistan to upgrade a Turkmenistan-Uzbekistan-Kazakhstan-Russia gas pipeline. As a result, annual imports of Central Asian gas to Russia are expected to increase from 50 billion cubic meters up to 90 billion cubic meters.

This came not only as a blow to current talks but also endangers the US-backed BTC. Is the West in serious danger of losing the battle of the supply routes?

Indonesia’s Minister of Defense has called for maritime security assistance from Japan, China and Korea. This is big news for two audiences: the World and Japan.

First, the Malacca Strait is an extremely important sea line of communication (SLOC, some semi-related background here) handling 40 percent of the world’s maritime trade. It is also one of the EIA’s world oil transit chokepoints. Unfortunately, it has a big piracy problem. Until recently, of the three main countries involved in the Strait’s security (Singapore, Indonesia and Malaysia) only Singapore wanted international support for defense. Malaysia flipped last March and now with Indonesia jumping on the bandwagon we could see some movement to a more international presence in the Strait, and hopefully less risk to the world economy at large.

Secondly, Japan imports 99% of its petroleum and 70% of its food by sea, mostly through the Strait of Malacca. 86% of Japan’s oil comes from the Middle East, and the rest basically from Indonesia. Obviously SLOC security is a big pillar of Japan’s overall security agenda. Tokyo has proposed sending some ships and planes down south to patrol, but memories of the last time Japanese naval vessels were in the area have kept most southeast Asian countries from accepting the offer. Singapore was the only country to present a welcoming hand. Japan has been able to contribute some Coast Guard support, but now with Indonesia’s minister of defense calling for help on the Asia Big Three, Japan could find itself having a direct say in protecting an economic lifeline from afar.

An extra punch, and this one is for Tom, this type of activity could bring the goal of an “Asian NATO” one step closer.