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Crossroads TRANSFORMATIONS on the ROAD to 2040

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Crossroads TRANSFORMATIONS on the ROAD to 2040 Crossroads TRANSFORMATIONS ON THE ROAD TO 2040 MICHAEL LOESCHER AND MIKA AALTONEN Crossroads Transformations on the Road to 2040 MICHAEL LOESCHER AND MIKA AALTONEN Cover Photo: Tankers Offshore Ghana © 2012/ag Loescher Aalto University publication series CROSSOVER 3/2015 © Michael Loescher and Mika Aaltonen Graphic Design Unigrafia Oy ISBN 978–952–60–6156–6 (printed) ISBN 978–952–60–6157–3 (pdf) ISSN-L 1799–4977 ISSN 1799–4977 (printed) ISSN 1799–4985 (pdf) Unigrafia Oy Helsinki, 2015 CONTENTS Foreword – Our Philosophy .............................................................................. 7 Chapter 1 – New Worlds ................................................................................. 9 Dawn ................................................................................................ 11 Elemental Change ............................................................................. 15 Virtuality and Venues ........................................................................ 16 The Planetary Crisis .......................................................................... 16 Population Growth .............................................................................18 Urbanization ......................................................................................20 Developments in Trade ..................................................................... 22 Chapter 2 – World Transport ......................................................................... 25 Air Transport ......................................................................................27 Hinterland Rail ...................................................................................28 Maritime Trade ..................................................................................30 Perspectives on Shipping .........................................................33 The Major Divisions in Shipping ........................................................44 Logistics vs Maritime Transport ..............................................45 Segments and Services .............................................................48 Ownership and Registry ..........................................................53 Ship Types and Cargos .......................................................................54 Ship Types ...............................................................................56 Cargos .....................................................................................76 Strategic Considerations ..................................................................................78 Iron Wars ...........................................................................................78 Chapter 3 – Extended Value Chain ................................................................. 87 How the Business Operates ............................................................... 89 The Shipping Cycle ................................................................. 89 The Shipping Markets ............................................................ 91 The Freight Market ................................................................ 92 Sales and Purchase Market ...................................................... 94 The Role of Information ......................................................... 94 Shipyards ............................................................................................95 Russian Shipbuilding: Redux? .................................................97 The US Shipbuilding ...............................................................97 The UK Shipbuilding ...............................................................98 Continental European Shipbuilding ........................................98 Far Eastern Shipbuilding .........................................................99 Lines of Communication .................................................................. 101 Panama Canal ........................................................................ 101 Suez Canal ............................................................................. 104 Strategic Considerations ................................................................... 108 The 125th Parallel .................................................................. 111 The Implications for Regionalism .......................................... 112 New Visions ........................................................................... 115 Chapter 4 – Dawn in the North ..................................................................... 117 Game Changer ................................................................................. 119 The Issue Of Melting ............................................................ 119 How Far And How Fast? ........................................................ 121 The Melting Trends ............................................................... 123 An Overview of the Arctic ................................................................ 124 The Arctic Defined ................................................................ 125 Arctic Geology ....................................................................... 125 Arctic Bathymetry .................................................................. 127 Currents ................................................................................ 128 The Polar Passages ............................................................................ 130 North Atlantic Seaboard And Barents-Kara ......................... 132 Money And Profits Reign ...................................................... 133 The Northwest Passages ................................................................... 134 Sovereignty ........................................................................... 135 The North American Arctic ................................................... 136 Geographic Summary Of Northwest Passage Region ............ 137 The Trans-Polar Routes In Brief ............................................ 138 The Passages Detailed ....................................................................... 139 The Western North Atlantic .................................................. 139 Grand Banks and Flemish Cap .............................................. 140 Labrador Sea .......................................................................... 140 Davis Strait ............................................................................ 142 Greenland .............................................................................. 142 Baffin Island .......................................................................... 144 Hudson Bay ........................................................................... 145 Baffin Bay .............................................................................. 146 Nares Strait Direct To The Arctic .......................................... 147 Lancaster Sound To The Beaufort Sea ................................... 148 Ice Islands .............................................................................. 149 Prince Of Wales Strait ........................................................... 149 The Remaining Passages ........................................................ 150 Mackenzie Delta And Beaufort Sea ........................................ 150 Alaska .................................................................................... 153 Berings Strait ......................................................................... 154 Strategic Considerations ................................................................... 154 Future Value of the Northwest Passages ................................ 154 Chapter 5 – Conclusions ................................................................................ 157 Russia’s Dilemma ............................................................................. 164 Europe’s Dilemma ............................................................................ 165 The Value of Ukraine ........................................................................ 169 Dragons Be There ............................................................................. 171 List of References ........................................................................................... 173 List of Figures ............................................................................................... 179 Author Bios ............................................................................................... 180 FOREWORD OUR PHILOSOPHY In the long catenaries of human history, there have been moments when, for one reason or another, the commonly accepted view of how the world works suddenly and shockingly is destroyed. When that common perspective is shattered, the very scaffolding of the world — its power structure, ideas of morality and legality, the tangible objects of wealth, and intangible objects of awe — collapses. Eventually, the new world must be redefined, a new machine to hold the hopes and civilized lives of human beings must be devised. CROSSROADS is a “blue paper”, designed to foster a common perspective on future over the next 25 years. In writing CROSSROADS we had several specific objectives in mind: • That the dialog be conducted across all government agencies in order to leverage talent, organization, and money. • In particular, the recognition that national security and the national economy are linked. • That it will lead to a structured, dynamic,
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