Hanjin Marooning in San Pedro Bay

Global Trade Reversal
Expansions and contractions in global trade have played out over long secular trends for thousands of years. The Silk Road, for example, was established by the Han Dynasty of China in 130 BC, and allowed for continuous trade between East and West for nearly 1,600 years. In addition to economic trade, the Silk Road was also a conduit for culture and knowledge among its network of civilizations.
However, this trade route eventually came to an end. When the Byzantine Empire fell to the Turks in 1453 AD, the Ottoman Empire closed the Silk Road and cut all ties with the west. Geopolitical trends turned inward towards isolation.
In more modern times, global trade has been conducted by shipping cargo across the international waters of the high seas. Over the last 200 years trade cycles have often expanded for such lengthy periods that several generations will come and go while only knowing this half of the trend. During these episodes people come to believe increased global trade is a linear phenomenon.
In many parts of the world, you’d have to go back to before 1960 to find someone with living memory of a global trade contraction. In the United States, Japan, and Western Europe this is certainly true. In China, the current trade expansion began in the 1970s and in Eastern Europe it began in the early 1990s.
But just because global trade has expanded for the last 50 years doesn’t mean increased global trade always occur without interruption. According to the World Trade Report 2013, ‘While the long-term trend has been in the direction of expanding trade and deeper integration, unpredicted (and perhaps unpredictable) geopolitical shocks have periodically interrupted or reversed this trend, suggesting the need for caution in extrapolating from the economic past into the economic future.’

This post was published at Acting-Man on September 12, 2016.