• STRATFOR ANALYSIS

    Magellan’s voyage and the era of global trade

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    Analysis
    Nearly 500 years ago, Portuguese explorer Ferdinand Magellan set out with a fleet of five ships on behalf of the Spanish crown. The intent was to conquer the seas and find an alternative western route to the Far East to maintain the spice trade. On Nov. 1, 1520, after more than a year of sailing and a failed mutiny, three ships entered the eastern opening of the passage now known as the Strait of Magellan. Thirty-eight days later, after the crew had navigated the 530-kilometer (373-mile) maze, they emerged on the other side to find another vast body of water, which Magellan dubbed “Mar Pacifico.” Having successfully navigated the strait, a small fraction of Magellan’s crew managed to complete the first circumnavigation of the globe, although the captain’s own voyage would be cut violently short — he would die in battle in the Philippines before returning home.

    Magellan’s voyage was one of many achievements during the Age of Discovery, a period from the 15th through the 18th century, when extensive exploration changed the shape of the world — literally for cartographers and more existentially in terms of political and economic relationships. Discoveries like Magellan’s also set the foundation for the level of globalization we see today. The evolution of sailing technology, including the caravel ship design and improved rudders for steering, helped sailors maintain a steady course. The astrolabe and the compass enabled more precise navigation on open waters, expanding where and when ships could travel. A series of scientific breakthroughs allowed Spain, Portugal, England, the Netherlands and other European nations to overcome the geographic constraints of continental Europe. No longer beholden to a treacherous land route for trade with the East, Continental naval powers came to define geopolitics for centuries.

    Further technological developments
    For hundreds of years after its discovery, the Strait of Magellan played only the smallest of roles in global trade. The Spanish and Portuguese even kept the passage a secret for a time. Moreover, sail-powered ships preferred the more southern route around Cape Horn via the Drake Passage (discovered after Sir Francis Drake navigated the Strait of Magellan but then drifted off course to the south). Both routes were treacherous, but sailors found the storms around the southern tip of South America preferable to the strong winds and unpredictable currents of the strait.

    Another technological advancement, however, soon gave the Strait of Magellan greater importance to global trade. Steam-powered ships ushered in a golden age of trade in the southernmost reaches of South America. In 1840, steam navigation began through the Strait of Magellan. The shipping sector gradually transitioned to steam power, and the volume of traffic through the Strait of Magellan increased accordingly. Fueling stations were established in the region, and a commercial center developed.

    Merchant traffic continued to grow until the beginning of the 20th century. Then, yet another technological advancement led to the precipitous decline of trade through the region. The opening of the Panama Canal in 1914 made voyages from one ocean to the other significantly shorter, and the Strait of Magellan once again fell out of favor as a passage across South America. Today the strait is still functional, serving regional trade and ships too big to pass through the canal, but it is far from being the lynchpin to global trade that the Panama Canal has become. The expansion of the Panama Canal, set to open next year, will likely reduce traffic through the strait even further.

    Recent evolutions in shipping
    In the 21st century, when we consider the global supply chain we no longer talk about a timeline of months or years. Newer technological advances have reduced transportation times to days and weeks. Coal-powered ships gave way to petroleum-powered ones. The advent of container shipping alleviated delays caused by congestion at ports, railways, roads and warehouses.

    The evolution of the global supply chain illustrates the effects of continuous technological development on the world. From wind-powered to coal-powered then petroleum-powered ships, and from break bulk — or the shipping of cargo in separate pieces — to containerization, technology in shipping has shifted trade patterns and often the fates of small countries or communities along those routes. Moreover, future developments promise that supply chains will keep evolving as logistics firms adopt new equipment and techniques.

    Yet that evolution is no longer one of discovery so much as one of innovation. Technological developments in global trade are more incremental now. The world has been mapped, and it will take a change of the physical environment to open up new routes. In the somewhat near future, governments and companies could take advantage of opening Arctic routes for international trade — which in turn would prompt nations to invest more effort in controlling access to these passages. But it is really the quest to overcome other limitations, such as growing congestion, that is the new focus of technological development. This is especially true in a competitive global economy where supply chains are flexible; congestion and subsequent delays can make a specific route less attractive and cause it to lose traffic to a viable alternative. After all, there is rarely just one way to get materials and goods from one country to another. Even the Strait of Magellan faced competition almost immediately from the Cape Horn route and later from the Panama Canal.

    The technologies that could aid in relieving congestion are numerous: big data could help to better coordinate supply and demand, drones could handle the last mile and relieve urban congestion, and driverless vehicles could increase the efficiency of freight traveling by road. Furthermore, additive manufacturing (also known as 3-D printing), in its most extreme iteration, has the potential to slow or even reverse the globalization trends set in motion centuries ago.

    Technology has the power to break the chains of geographic constraints, just as breakthroughs like the caravel ship and the compass did hundreds of years ago. While we are no longer drawing new maps or discovering new geographies on this planet, technological advances — be they in supply chains or in other sectors altogether — have the potential to redraw, however slightly, the metaphorical map.

    © 2015, STRATFOR GEOPOLITICAL INTELLIGENCE

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