The increasingly tangible threat of conflict expansion in Ukraine and Gaza has led to frequent discussions in Europe about a "war economy," a concept that emerged on the eve of World War I, 110 years ago. Indeed, elements of such an economy have already surfaced, including sanctions against Russia and obstacles to oceanic transport due to the Red Sea crisis. However, the question remains: what could a war economy mean for intercontinental container transport, the vital circulation system of the global economy?
Upply tackles this issue in a text by Jérôme de Ricqlès, based on an article published on January 10, 2024, by the French daily Le Monde. The article explains that in 1914, a war economy meant "redirecting raw materials, industrial production, as well as food and textiles, logistics, taxation, investments, and savings solely to military needs, even at the cost of rationing civilian consumption without sacrificing fundamental needs."
Today, the impact appears – at least for now – more limited, though increased military spending will undoubtedly affect European welfare. Assuming a deterioration of the situation – not only in traditional military terms but also in terms of hybrid, economic, and cyber warfare – the Jérôme de Ricqlès article attempts to predict the impact of a modern war economy on maritime container transport.
From the perspective of shipping companies, Jérôme de Ricqlès believes that a portion of the merchant fleet could be requisitioned by states, with charter rates remaining above operational costs and the inclusion of military personnel in the company's command chain. These container ships could then be used for transporting military materials or for other military purposes, such as espionage or disguised fire platforms. This scenario anticipates the destruction of requisitioned cargo ships, with the state providing compensation at predefined values.
A war economy would also have implications for freight forwarders. There's the obvious consequence of interrupted traffic with countries deemed enemies (which already occurs today with sanctioned states), although experience with Russia and Iran shows that sanctions can be circumvented. The article concludes that war and international maritime trade are not incompatible, but a more restrictive, controlled, and necessarily state-regulated scenario would emerge, especially for the movement of products considered necessary or strategic.
It's noteworthy that we have already experienced a condition of emergency logistics with the Covid-19 pandemic, suggesting that lessons learned from this experience could be useful in a war economy. Unlike the pandemic, however, Jérôme de Ricqlès anticipates that a wartime situation could lead to the establishment of maritime freights set by states or supranational institutions.
This could lead to the publication of Commodity Box Rates, i.e., rates established for types of goods and individual routes between ports, renewable periodically. This would ensure maritime transport that is profitable for operators and controlled for transport users in a wartime context.
Upply's text notes that today, this system of Commodity Box Rates could be easily implemented on a global scale based on the HS code system, which describes and codifies goods. Essentially, this would mean a return to the freight rates applied by maritime company conferences before the liberalization of 2008.
In conclusion, Jérôme de Ricqlès suggests that transitioning to a war economy could lead to at least a partial suspension of the liberalization of container maritime transport for the duration of the conflict. However, this comes with a complication: redefining the concept of war, its geographical extent, and its duration in a context new to the past.
