Transcription
Another piece of the Industrial Revolution is the Suez Canal, which is going to wreck the camel trade on the going on the Silk Road because once the canal is built, even with steamships with the the canal even more so, it is so much cheaper to send things by ship than to try to walk it over Eurasia with draft animals. And it just upends the economics of the continental world versus the maritime world.
And I let's fast forward 100 years to the 1967 uh war where you've got Israel fighting uh Egypt, Jordan, and Syria. And as part of Egypt's strategy, doesn't want Israel using the Suez Canal, so they sink a bunch of block ships here. So, that's the operational effect. Israel is not going to be using Suez Canal.
But here is the strategic effect, the ones that actually count in this life. If you look at before the war, um most uh what is it? Almost 90% of ships were 50,000 deadweight tons uh or less. And this is numbers of ships, right? And so they could all make it through the Suez Canal, which could take uh ships up to that size. But then the Suez Canal is is closed down from 1967 to 19 uh '72-ish. And so, that's a long time in world trade.
Well, look at the adjustments that take place. All of By the time you get uh later, you get uh by '72, you got almost 30% of the number of ships, not the capacity, are these huge ships that never had existed before. They're not going to make it through the Suez Canal. The Suez Canal has since been widened, but still the biggest ships can't make it through. And so then if you look at the cost of sending oil from the Persian Gulf to Rotterdam in the Netherlands, if you're going to send it in an itty-bitty ship through the canal, it might be a little over $13 per ton to send it. Whereas, if you're sending in a big ship the long way around Africa, I believe it's a third that price. So, um strategic effective things, unexpected, that overhead costs in shipping is is uh the size of ship gets over a lot of it. It's not about distance.
And here's the other guy who really revolutionized maritime trade, Malcolm McLean, who I bet you've never heard of, but now I'm going to fix that. He ran a um trucking company, and he decided to put the chassis that his trucks, minus the chassis, on ships, what we call containers. Above decks, below decks. When he did this, he reduced the costs, loading costs, from nearly $6 a ton from to less than 20 cents. And then port time is again much reduced, so ships are out about making money.
And then for those of you who are skeptical about international organizations, here's one you've never heard of, the International Organization for Standardization, then standardized these container sizes to fit one if by truck, two if by railway cars, and thousands if by sea. And this just plummets transport costs. But so, before you dismiss international organizations, understand that here's a little one you've never heard of that has made massive changes in your lives. Okay, and it leads to plummeting transport costs through the duration of the 20th century.
And our latest uh dictator for life, Xi Jinping, he's got this Belt Road thing that he thinks is going to be a good idea. Uh good luck with that one. And here are the statistics to back me up. Until 1960, the average tanker size was 20,000 deadweight tons. And if you look in our own day, the smallest ultra large uh crude tankers are a quarter of a million deadweight tons. I believe the longest train can take maybe 600 containers uh on a good day. Whereas, the largest container ships can take over 21,000 uh cargo with cargoes valued over 1 billion dollars. So, it is so much cheaper to send things by sea.
And oh, on the Belt Road thing, it would be nice if the whole thing were continuous. It's not. It would also be nice if they were all the same gauge. It's not. So, you're loading, unloading, loading, unloading. What a mess. Also, not only is it far cheaper to send things by sea, it is far more secure. If you're going to run the Belt Road thing or say it's the belt part of it, the land part. You've got to control the whole thing end to end. You're going through some of the most unstable places there are. Good luck with that one. Whereas in the maritime world, if it is unstable or they do block ships and close down the Suez Canal, well, forget it. Just go the long way around. It'll be fine.
And also for China with its geographical setup as it is, the seas are going to be open to it only in peacetime. In wartime, this has nothing to do with anyone doing anything to them. It's just fact. It is surrounded by loads of neighbors, shallow seas, lots of islands that are completely blocked and they're blocked in from the the high seas and from very predictable points. In wartime, those places become kill zones. Merchant traffic cannot make it through those places unless you're friendly with everybody, which China currently isn't. Maybe it'll change. And even your surface ships won't make it out. So, peace is definitely the better thing.
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