As tensions might drag over the next decade, investors have to learn to operate under prolonged uncertainty, said Warburg Pincus' Charles Kaye.World Economyread more
— This is the script of CNBC's news report for China's CCTV on August 21, Monday.
On Monday, guided-missile destroyer McCain collided with a merchant vessel along the Malacca Strait, triggering a series of questions from the public as this is not the first time in a short while, that a collision occurred. In mid-June this year, a US Navy Destroyer "Fitzgerald" collided with a Philippines cargo ship near the waters of Japan, resulting in the death of 7 U.S sailors. Then again, earlier in May, a U.S guided-missile cruiser "Lake Champlain" collided with a Korean fishing vessel. Fortunately, there were no casualties.
Indeed, the several collisions that occurred within this year piled up pressure for the U.S navy. Last night in view of the crash, Commander of U.S naval operations, John Richardson, ordered for an operational pause in its global fleet operations.
[John Richardson, Chief, U.S. Naval Operations] "This trend demands more forceful action. As such, I direct an operational pause be taken in all of our fleets around the world. We want our fleet commanders to get together with their leaders and their commands to ensure that we are taking all appropriate immediate actions to ensure safe and effective operations around the world."
Besides the U.S fleet itself, another factor that cannot be ignored is that the Straits is one of the busiest shipping routes in the world where the congested traffic posed an increased risk of accidents for naval fleets.
The Malacca Strait is no doubt one of the world's busiest waters because geographically the Strait connects the Pacific and the Indian Ocean. Many major economies in the Asia-Pacific region are very dependent on the channel for energy and resource trade with Middle East and Africa. About 25 percent of oil shipped between the Middle East and Asia passes through the trait and nearly 100,000 vessels pass through it each year, accounting for about one-quarter of the world's traded ports.
Although, the Malacca Strait is crucial for global commerce, its geography is what makes the Strait dangerous as it remains one of the world's most narrowest straits. For example, the Philipps Channel, somewhere not far from Singapore, is 1.5 nautical miles at its narrowest, making it a perilous spot along the entire strait.
About 60 maritime accidents occurred throughout the Strait of Malacca in 2015, resulting in officials surrounding the strait, such as Indonesia, Malaysia and Singapore, to take joint measures to reduce potential accidents. Indeed, following the rise of global trade, countries from Asia-Pacific, Middle East and Africa will be increasingly more dependent on the Malacca Strait for trade.
Inevitably, it would increase the risk for more conflicts or collisions And in this context, should military activity significantly increase in this area, it is inevitable that there will be more collisions. We will continue to keep watch. CNBC's Qian Chen reporting from Singapore.