While speaking of the Belt and Road Initiative (BRI), the central focus for logistics tends to be on rail freight as the 21st Century Maritime Silk Road (MSR) is kept in the backdrop. However, the MSR is equally integral to the BRI, as it strives to include many nations under this cooperative endeavour.
To explore the nuances of the MSR, one needs to understand its origins, its effect on the various aspects of the logistics industry and its prospects. Moreover, we will glance at some significant examples of MSR’s contribution to the shipping industry. The MSR has created a unique ecosystem for shippers and freight forwarders, providing ample growth opportunities. Moreover, it has effectively boosted the economic conditions of regions by contributing to infrastructural development.
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The 21st Century Maritime Silk Road (MSR) derives its name and nature from the ancient Maritime Silk Road which flourished between the 2nd Century BCE and 15th Century CE. Apart from China, Arab, Tamil, Southeast Asian merchants also traded along this route. It was further revived by the Ming Dynasty under the command of Admiral Zheng He. Later the Portuguese traders utilised the route to expand on the spice trade during the 16th Century and establishing dominance over the Malacca Strait.
Apart from the historical context, the momentous decision in 2013 by President Xi Jinping revived the Maritime Silk Road under the Belt and Road Initiative, naming it the 21st Century Maritime Silk Road (MSR). China has a strong shipping industry with some of the largest ports in the world. With 14,000km long coastline, China has as many as 20 deep harbour ports amongst numerous smaller ports. 90 per cent of foreign trade by China is conducted by shipping. With such a robust ecosystem, the Chinese shipping industry has a solid foundation to expand its activities in different parts of the world.
The biggest motivation for the MSR was to improve and diversify connectivity between China and Southeast Asia, South Asia, Middle East, Africa, and Europe. These network of port cities across the world were aimed to target the hinterland economic hubs of China, that lose out on the benefits that the coastal cities enjoy. The strategies are not limited to different sea routes or port projects, but also include the construction of railway, pipeline and power plants that would support these growing ports.
Understandably, a project of this grand scale comes with its own challenges ranging from introducing bilateral agreements, utilising natural resources, understanding the economic, the political and cultural purview of each geographical location. The larger goal for the MSR is to create a safe and efficient network between ports across the world and promote trade within the sphere of the Belt and Road Initiative.
21st Century Maritime Silk Road Projects
As of now, the MSR is involved in 83 projects in different port cities of the world. In many cases, the MSR has contributed to the construction and functioning of the ports. The leading example of the MSR’s vigorous activities can be found in Piraeus, Greece; Gwadar, Pakistan and Hambantota, Sri Lanka. These three ports are pet projects of the MSR that are undergoing massive infrastructural developments and complete revamps.
Port of Piraeus:
Situated in Athens, Port of Piraeus is one of the major employers in the city. It was one of the main focuses of the Belt and Road Initiative to restore this port and turn it into a significant hub in Europe and a choice destination for logistics companies. Moreover, COSCO has a 35-year lease so that it could upgrade and run the cargo piers on Piraeus. After this decision, there was a significant increase in the TEUs being handled by the port. Moreover, COSCO plans to turn the port into one of the biggest commercial harbours in Europe with an investment of $660 million with an additional $300 million by 2022.
Gwadar Port:
This is one of the deepest seaports in the world. The port is one the milestones of the China-Pakistan Economic Corridor (CPEC). Under the CPEC, the plan has now entered the second phase of construction with additional services and opportunities. The port also contains a power plant. Though owned by the Pakistani government’s port agency, the operations are conducted by Chinese Overseas Port Holding Company, a state-run Chinese firm. One of the main reasons that Gwadar receives so much attention is because it is a way for China to avoid Strait of Malacca, which has always been a point of geopolitical uneasiness. Gwadar also gives better access for the growing regions in Western China and act as a transit hub for the landlocked countries of Central Asia.
Hambantota:
Magampura Mahinda Rajapaksa Port in Hambantota, Sri Lanka was initially established to relieve the Colombo Port of the traffic. However, it ran into trouble due to inactivity, incurring a significant loss. To solve the issues, the government of Sri Lanka offered China Merchants Port to revitalise the port and construct a Special Economic Zone (SEZ) of 15,000 acres. Future expansions have been planned for the port that will include a dockyard and a container terminal.
Evidently, the MSR has contributed significantly to the growth of the infrastructure in many countries and the overall oceanic trade. Moreover, it has contributed to the increasing economic coordination and connectivity between Europe, Africa and Asia. Sometimes fraught with challenges, largely this initiative has resulted in growing enthusiasm amongst countries in these continents.
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