Southeast Asian Chokepoints. Keeping Sea Lines of Communication Open

Abstract

Conclusions * The Sea Lines of Communication (SLOCs) in the Indonesian Archipelago and the South China Sea remain critical for U.S. national interests. * Half of the world's shipping passes through the SE Asian SLOCs. * Closure of any of the SLOCs would raise shipping freight rates throughout the world. U.S. imports and exports would be directly affected. * A serious blockage could cause a world-wide shipping shortage, and, at least in the short term, place severe pressure on the economies of region. * The U.S. has direct and immediate mari-time economic interests to protect in the region, namely, orderly shipping markets, commercial freedom of navigation, and stability on the South China Sea. Merchant Shipping in Southeast Asia Over half of the world's merchant fleet capacity sailed through the Straits of Malacca, Sunda, and Lombok in 1993, or sailed passed the Spratly Islands. Over one third of the world's fleet weighing more than 1000 DWT visited the region (Table 1 on page 2). The sheer volume of merchant shipping transiting the South China Sea gives the region global significance. Any disruption on these high seas can impact all shipping worldwide. The Straits: Chokepoints for Shipping Many nations in Southeast Asia are either insular or peninsular, or have extended coastlines. Land transport infrastructure is not well developed, so, most trade moves by sea. The region's seaborne imports and exports are growing rapidly. Geographic and economic factors confer importance to certain key waterways. The three southern entrances into the region: the Straits of Malacca, Sunda, and Lombok are particularly important chokepoints in the world trade system. Equally important because of the threat of political and economic disputes are the sea lanes passing the Spratly Islands in the South China Sea. The Strategic Interests of the United States The U.S. Navy has long been assigned the mission of protecting the SLOCs of Southeast Asia. During the Cold War, the mission was viewed in strategic military terms: the United States needed to be able to move military supplies through the region in crises, and deny the SLOCs to the Soviets. Now that the Soviet threat is gone, what national interests are at stake? Does it matter if merchant ships are forced to detour? Whose ships and whose trade use these trade routes? What are American interests? To answer the question Who benefits from free access to SE Asia SLOCs? the CNA team gathered extensive data on shipping and trade to analyze what would happen on the high seas if these SLOCs were closed. What if the SE Asia SLOCs Closed? At present, events that could disrupt passage through the SE Asian sea lanes for an extended period are unlikely. Nevertheless, unanticipated challenges might cause sustained disruption with serious consequences. In principle, blockage of shipping lanes might not be a serious matter. Alternate routes are available. For example, ships denied access to the Malacca Straits might use Sunda. The Straits of Lombok and Makassar offer an alternative to the South China Sea. These detours are not so large, and after all, merchant vessels offer one of the cheapest modes of transport. In practice, however, it turns out that blockage of these SLOCs would matter a great deal. Nearly half the world fleet would be required to sail farther, generating a substantial increase in the requirement for vessel capacity. All excess capacity of the world fleet might be absorbed, depending on the number of straits closed and how long they remained closed. The effect would be strongest for crude oil shipments and dry bulk such as iron ore and coal. (See Table 2.) Closure of the Straits of Malacca would immediately raise freight rates. Denial of the SLOCs passing the Spratly Islands to merchant shipping would disrupt world shipping markets even more severely generating shortages. …