Sinews of War and Trade. Laleh Khalili
– were wary of letting ships carrying US oil through. The fear was that Standard Oil would bring oil to the East and monopolise the markets there, then use this monopoly to import petroleum from the West Coast of the US, shutting out British firms. The canal authorities’ fealty to Britain and concern about the Pacific trade in oil bypassing the canal led them to grant Shell permission to steam Murex through the canal. For the canal officers, ‘to allow the passage of British tankers, carrying Russian oil with the object of building up, instead of destroying, the oil trade between Batumi and the Orient, was obviously to the advantage of the Canal’s finances. The Authorities would naturally be sympathetic to any such proposition.’42 The plan was a success for Shell, which eventually merged with Royal Dutch (an oil-production firm operating in Southeast Asia) to become Royal Dutch Shell.
Within a few short years, tankers became the standard vehicle for petroleum transport and their widespread adoption enormously increased canal traffic. The ease of transporting petroleum by tanker was one factor in the eventual displacement of coal as the fuel of global economies.43 A drop in the southbound transportation of coal through the canal was eventually balanced by a massive increase in the northbound traffic of petroleum. While in 1910 crude oil constituted only 1 per cent of the total northbound tonnage of oil through the canal, by 1960, petroleum’s share of tonnage travelling northbound through the canal had increased to nearly 82 per cent.44 This was two-thirds of all the petroleum transported from the Middle East to Europe.45 The surge in extraction and trade of oil in this fifty-year period also had seismic effects in the making of the politics and social relations of the Arabian Peninsula and the world.
The closure of the canal – first for eight months after the 1956 tripartite invasion of Egypt by Britain, France, and Israel, and again for eight years after the 1967 War – had its own extraordinary effect on global shipping. The closure of the canal proved a boon in the construction of very large crude carriers (VLCCs) and ultra-large crude carriers (ULCCs) that could round the Cape of Good Hope with notable economies of scale. In 1971, 80 per cent of all tanker orders were for such supertankers.46 After the canal was cleaned of the debris of the 1967 and 1973 wars, dredged, deepened, and reopened in 1975, it saw the return of much of the freight it had lost – but not the VLCCs and ULCCs, which were now too large to pass through. The additional flow of traffic, along with the post-1973 surge in construction in the oil-producing countries of the region, saw a deluge of building goods and consumer products imported into the ports of the Arabian Peninsula via the canal.
In the intervening years, the business of the canal has flourished or diminished not only in accordance with volumes of cargo passing through it but also as refracted through political calculations near and afar. Most recently, in 2015, the canal saw the opening of a bypass channel along its middle third. The project has in part been General Abdel Fattah el-Sisi’s attempt to replicate the glories of early postcolonial mega-infrastructure construction. It involved excavating a parallel canal for thirty-five kilometres and dredging the already operational channel. It was said to have cost US$8.2 billion and, although the regime claimed that public subscriptions had financed the construction, there were always rumours that the Saudi state had poured money into the canal as a means of encouraging trade for its Red Sea ports.47
The captain of Callisto told me that the expansion of the canal was the fastest maritime construction project he had ever seen. When I first steamed through the canal in February 2015, one could see bulldozers and earth-movers on the Sinai shore of the canal. By August 2016, the second channel of the canal had opened between the top of the Great Bitter Lake, all the way up to Qantara, thirty kilometres short of Port Said at the northern end. Though the top and bottom thirds of the canal are still one-way, the newly dug bypass allows for a shorter travel time, as a convoy can make it halfway through the canal and await the passage of the convoy coming from the opposite direction before proceeding apace. The new channel reduces the passage time through the canal; dredging and deepening mean that tankers heading north along the canal need not be in ballast.
Although many economists in Egypt are sceptical about the wisdom of expanding the canal, the success of the expansion will be judged by shipping speeds. Cyclical collapses in the price of oil slow down tramp tankers, which await small increases in oil prices before delivering their cargo. More recently, shipping companies have been commissioning ships designed for slow-steaming and are even reverting to using a high-tech form of sail to deploy wind power for their ships and save on fuelling costs.48 Whether companies that deliberately slow down their ships in order to secure small savings will be willing to pay the exorbitant – and mushrooming – fees for crossing the canal remains to be seen.
They are the conquerors of the world
Seeking a personal chemical fortune;
Sports and comfort travel with them;
They take the education
Of races, classes, and animals, on this Boat.
Arthur Rimbaud, ‘Motion’
In the summer of 2017, only one day after Saudi Arabia, the UAE, and their allies declared a blockade against Qatar, the largest shipping company in the world, Copenhagen-based Maersk, announced that it was rerouting containers intended for Qatar, delivering them via a new feeder service from the port of Salalah in Oman instead of the original transhipment port, Jabal Ali in Dubai.49 Eventually, Qatar shifted its transhipment hub from Jabal Ali to the Omani port of Sohar, which is much closer than Salalah. Maersk could accomplish this nimble manoeuvre because, like many of the world’s major shipping companies, it has close relations with a terminal-management company. Maersk and APM Terminals are both owned by AP Moller-Maersk. APM Terminals (APMT), the third-largest terminal operator in the world, manages the container terminals at the Salalah port. Sohar’s container terminals are managed by Hong Kong–based Hutchison, which is the second-largest in the world (after Singapore-based PSA International). Jabal Ali is managed by Dubai Ports World (DP World), the fourth-largest terminal operator in the world.50
These terminal-management arrangements can be crucial in deciding shipping routes, since a Maersk ship is more likely to unload its goods at an APMT-managed terminal close to its cargo’s final destination. Special arrangements between other large shipping companies and specific terminal operators that are not co-subsidiaries can also similarly influence shipping routes and destinations.
The world’s third-largest shipping company, CMA CGM, is based in Marseille, France; I travelled on its freighters between Malta and Dubai. The company is owned by the Lebanese-French Saadé family, who hail from Latakia in Syria. Escaping the Lebanese civil war in 1977, Jacques Saadé and his brother Johnny (who later left the firm) founded Compagnie Maritime d’Affrètement (CMA) in Marseille in 1978 to ferry wheeled vehicles on ‘ro/ro’ ships between Marseille and Beirut.51 In 1996, the French government offered to privatise the state-owned shipping firm, Compagnie Générale Maritime (CGM), which had been established in the mid-nineteenth century and whose early success had depended on the mail subsidies it had received from the government. Saadé’s CMA bought CGM, and his CMA CGM was born. In the aftermath of its founding, the company aggressively acquired smaller shipping lines in Africa, Asia, and the Middle East and forged alliances with terminal operators throughout these regions.
CMA CGM today operates in an alliance with two other shipping companies, China Shipping Container Lines (headquartered in Shanghai, China) and United Arab Shipping Company (based in the UAE, though partially