Monthly Archives: October 2015
Poland – Scandinavia’s strategic hub?
The highly dynamic changes on the international arena and the shifting balance of power on a global scale create completely new opportunities for countries in the Baltic Sea region.
In the first half of the 20th century, the reviving Second Republic of Poland put forward the geopolitical concept of Intermarium. It was to be a federation of states, bordering the triangle of the Baltic, the Adriatic, and the Black Sea, whose main objective at that time was to oppose German domination as well as threats coming from Russia.
The Intermarium concept at the beginning of the 20th century. Source: Wikipedia, own work.
100 years later, the Intermarium concept takes on a completely different dimension and meaning. There is the growing economic power of the Far East with China at its forefront, while the economic position of the United States has relatively weakened, especially since the crisis of 2008. Russia expects that the world order will be renegotiated both in terms of security and international trade, causing tension in the international system designed after World War II. Scandinavia perceives this situation in a similar way to us, as I wrote in my previous post regarding the growing support of Swedes to join NATO.
What might the Intermarium of the twenty-first century involve? Before we answer this question we have to transport ourselves thousands of kilometers outside of our region and accept the fact that whatever happens in our little Europe will only be a result of decisions taken in the area of the endless Pacific.
Today, America is openly withdrawing from Europe. The Pacific Pivot strategy announced by the administration of Barack Obama will be continued irrespective of the political provenance of the next US government. The geopolitical and economic center of the world is moving into the Pacific, where the main maritime routes are still controlled by the US Navy. The Strait of Malacca is a bottleneck which connects the South China Sea with the sea route to the Persian Gulf and through the Suez Canal to Europe. We are witnessing an American diplomatic offensive in the region, which was manifested this October by signing the Trans-Pacific Partnership, excluding China, to regulate trade and activate America's traditional allies in the region, such as Australia, Japan and New Zealand. Obviously, this situation is not beneficial for the expansive Chinese economy, which must not only maintain the patency of the current trade routes with Europe, but develop them systematically.
The flow of freight traffic on sea trade routes. Source: barufa.hubpages.com
The Chinese President, Xi Jinping, is aware of the fact that every year at least 10 million new jobs should be created to meet the internal expectations alone arising from dynamic population growth. Without maintaining a high economic growth through trade, particularly with Europe, this will not be possible. Hence, the appearance of initiatives which aim at forcing the US out of the South China Sea, through such ideas as building artificial islands. However, there is another project far more interesting in view of the strategic development of countries located in the Baltic Sea region.
What bothers American strategists?
To introduce an alternative to maritime trade in the sensitive area of the South China Sea and the Strait of Malacca, the Chinese initiated the so-called New Iron Silk Road project that will allow them to trade with Europe in an unhindered way and without the participation of the United States. The concept refers to the ancient Silk Road and envisages the construction of a transport and logistics network across the Euro-Asian mainland by 2025.
Map of the New Iron Silk Road. Source: td-architects.eu
A rail network (including high speeds of up to 320 km/h) will of course form the basis of the system, but a road network, logistics centers and a number of accompanying infrastructure investments are also to be constructed. The New Iron Silk Road project is to connect 75% of the world population, joining more than 40 countries in Europe and Asia. Land transport from Beijing to Warsaw, Berlin or London will last...2 days.
The financial base is to be provided by the Asian Infrastructure Investment Bank (AIIB) launched this year as a Chinese initiative. Denmark joined it in April, Sweden, Norway and Finland in June and Poland - in September. So it is already happening before our very eyes, although with the current situation on the international arena, the final outcome of the project cannot be accurately predicted.
Let's look at the map of the project where the planned key world trade route runs through the Euro-Asian mainland. Scandinavia, having no direct connection to the New Iron Silk Road network, needs a trade gateway, a logistic hub which will provide access to the global circulation. Germany? Certainly yes, as a key European partner and a beneficiary of the project due to the deepening dependence of its economy on trade with China.
Nonetheless, it is always good to have an alternative, especially one that brings significant added value. At this point, Poland can enter the game, as in the context of the New Iron Silk Road, our location at the intersection of the future axis of communication between the north-south and the east-west is extremely convenient for Scandinavia. As the leader of the Visegrad Group and in cooperation with Romania, we can provide Sweden, Norway and Denmark with independent economic access, through the corridor of the Baltic, Adriatic and Black Seas, to Turkey, India, Vietnam and other countries in the Far East which are forecast by Oxford Economics, among others, to be key trading partners of Europe in the 21st century, beside China.
The last decade of successfully developing trade relations between Poland and Scandinavia, summarized in our TSL Report "A course on Scandinavia" is a solid foundation for further cooperation, this time outside our region. We just have to give up our old ways of thinking and skillfully play our part on the geopolitical world chessboard.
Containers of the future
Recently the transport market has been flooded with a number of technological innovations regarding intermodal transport, which is one of the most optimal options in terms of the macroeconomic scale of an enterprise. However, when making a decision whether to send a unit load in this way, we must be aware of the opportunities and risks arising from the intermodal option.
Indisputable advantages of this type of transport include, for example, the reduced transport costs (the further the distance for the goods to travel, the greater the economy), lack of exposure to communication problems (such as traffic jams, no thoroughfare, etc.) and others, resulting from the fact that a large batch of cargo can be sent at the same time.
Unfortunately, nothing is perfect, especially in transport, and this solution has its disadvantages too. The drawbacks undoubtedly include the need to use specialized handling equipment. The ecological "intermodal" is also unable to compete with road transport on shorter routes in terms of the transit time. So when the customer clearly cares about time, we might just not make it in time or not fit into the time schedule. Those who have ever dealt with combined transport know what I mean.
Of course, there are exceptions to this rule. By having one’s own block train, we can influence its time schedule, however, this is a very rare situation. The limitations may also concern the lack of a well-developed structure or appropriate connections, and it sometimes happens that such transport is simply not profitable over short distances. It is worth noting that when calculating the rates for intermodal transport, what must be taken into account are all the components of the transport, including the costs of road transport (trucking) and storage (in the necessity of bulking cargo required for the economic viability of rail transport), as well as transshipment costs. Naturally, wherever the precise logistics of ‘just-in-time’ or ‘just-in-sequence’ are needed (e.g. general cargo, automotive or the printing and publishing industry), "intermodal" transport cannot compete with road transport.
I still believe that it is always worthwhile to keep track of potential new logistics and transport solutions which, if not now, then in the future will help to optimize costs and become more competitive. For a few years now it has been said that the storage of empty containers is just as expensive as bringing them back. At the end of the day, the empty containers must be transported back to the base from where they were collected, and it is the carrier’s customer who bears the cost. When presenting the offer, this must be made clear. Of course the biggest players have optimized this problem to some degree by building a large transport network which provides cargo for the return of the container, but it is not always that simple.
And here comes the new technology of future containers. New designs of containers will allow them to be arranged in 10 to 12 layers during maritime transport. Each of them must be able to withstand a pressure of 350 tons, and that is impressive! Before they can be legally sold and used, they must obviously obtain the necessary approvals and certificates awarded by the relevant institutions and regulatory bodies of the maritime sector. From what I know, and I am passionate about intermodal transport, some companies are already close to this solution. At present, there are containers available on the market which can be stacked in 4 layers and placed on a train carriage. For now, that is a big step forward in reducing the costs of the return journey of containers in European traffic.
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