With only a minority of the world’s population working in sea-related occupations today, boardroom captains tend to think of the seafaring age — with its evocative clipper ships and ocean liners — as part of a past epoch.

But the landlubbers are wrong.

Not that long ago, the idea of using a phone to order something without actually talking to someone wasn’t even imaginable. Today, computers, tablets and smartphones allow us to quickly shop online for a wide range of goods and services without any interaction whatsoever with another human being. The fact that we can do this without even getting off the sofa represents a genuine revolution in global commerce that has been driven by the confluence of numerous innovations, ranging from IT to logistics.

Any way you slice it, however, a very material world still underpins all our online transactions. And this physical world is influenced more and more every day by sea power in all its dimensions. Indeed, think about how a Google Express package or Amazon Prime delivery actually arrives at your door. The final handoff is just the last link in a long and increasingly complex supply chain, one that often involves transporting products by sea over thousands of nautical miles.

Simply put, seaborne trade has reached levels never before seen in human history. Naval capacities are also rising. Meanwhile, beneath the sea, a vast amount of digital commerce hums invisibly through a global network of sunken fibre-optic cables. And then there is a little thing called climate change, which will revolutionize trade routes while opening the door to more national conflicts over waterways, not to mention natural resources.

Put together, all of the above will have a significant impact on how businesses run. In other words, just when everyone started getting comfortable with the Digital Age, there’s a whole new disruptor du jour to worry about and capitalize on — the new Maritime Age.

This article looks to the horizon, hoping to inspire managers to think about the rising influence of seaborne activity and related waves of change that will impact global commerce, including some with the potential to sink unprepared operations.

THE RISE OF A NEW MARITIME AGE

Don’t be fooled by the Baltic Dry Index (BDI), which hit a historic low earlier this year. Named after the London coffeehouse where it was born more than 200 years ago, the BDI, which tracks cargo rates, is used by economists to take the pulse of world trade. But while there is no question that the global economy remains under pressure, the weak BDI stems from a supply-side run-up in shipbuilding during the years before the Global Financial Crisis, not a deep decline in seaborne activity.

Demand for shipping will always rise and fall with business cycles, but the ubiquitous “Made in China” label signifies the transport of goods by sea on an unprecedented historic scale. Measured in billions of tonne-miles, seaborne trade has more than quadrupled in the past four decades. And this trend will stay its upward course.

The explosion of seaborne commerce since the 1960s can be attributed in part to trade liberalization and the opening of previously closed economies. However, as low tech as it may seem, the humble shipping container is the hero of this story.

In 1956, a retrofitted oil tanker left Newark and headed for Houston carrying 58 shipping containers. As noted in Marc Levinson’s book The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger, the concept of containerized shipping initially struggled before being widely adopted. Nevertheless, despite its modest beginning, the shipping container was a game-changing innovation on par with the jet engine and integrated circuit. Making the transport of goods exponentially more efficient, not to mention drier, it had sweeping economic consequences that sparked a boom in global trade.

And this unsung innovation is about to get even more efficient with the coming of a carbon-fibre design that aims to make containers lighter and more easily inspected by low-power X-rays (all foreign containers entering U.S. ports eventually require a scan due to security and immigration concerns, and scanning steel is costly and dangerous due to the powerful rays required).

As The Economist noted last year, carbon-fibre containers — which might even fold flat to save space when empty — would probably prove cheaper than steel after travelling around the Earth just three times. Meanwhile, other emerging maritime technologies, ranging from unmanned vessels to more environmentally friendly fuels that will help ship owners meet regulatory requirements to reduce sulphur dioxide emissions, are also expected to eventually further drive the growth of seaborne trade.

As things stand, many companies have almost 30 per cent of their inventories at sea at any given time. This exposes global supply chains to numerous natural and unnatural risks. And when it comes to risks, we are not just talking about risks to hard goods.

Many people assume that satellites carry the lion’s share of global communications traffic, but the truth of the matter is that some 95 per cent of intercontinental emails, telephone calls and financial transfers travel via “submarine” fibre-optic cables, which lie on the seabed, unprotected and vulnerable to accidental damage or attack by military organizations, terrorist groups, hackers and Mother Nature — any of which could seriously rock “normal” communications and commerce as we know it.

BACK TO THE 16TH CENTURY

In a more eloquent age, Sir Walter Raleigh noted: “Whosoever commands the sea, commands the trade; whosoever commands the trade of the world, commands the riches of the world, and consequently the world itself.” A lot has changed since Sir Walter’s day, but there is no doubt that the links between sea power, economic growth, international law and world politics have just grown deeper.

From a strictly legal perspective, the seas are free for all to use for lawful purposes. But UNCLOS — the United Nations Convention on the Law of the Sea — is the only framework that exists to prevent a “Wild West ocean.” And while China (despite its apparent deviations from UNCLOS) is a signatory, the United States, with its ambivalent relationship to the UN, is not. But even if every country adhered to UNCLOS, a nation’s legal right to trade by sea could still only be sustained and assured by sea power.

When it comes to investing in naval assets, however, trade is just one factor. With China, India and Australia, about 90 per cent of their international trade travels by sea. Seaborne shipments from the United States and Russia, on the other hand, make up much less of their total international trade (50 per cent and 10 per cent, respectively). And yet, all five of these countries are making major new investments in naval power with varied motivations.

Maintaining the ability to help keep seaways open and safe is an obvious motivation. And there is clearly scope for more cooperation in policing troubled waters such as the Gulf of Aden, Somali Basin, Gulf of Guinea and Indian Ocean — where piracy destroys wealth, kills people and corrupts and destabilizes governments. But naval investments typically stem more from national self-interest than any desire to help manage the global commons. According to a recent U.S. Congressional Research Service Report, for example, China may use its expanding navy for “conducting maritime security (including anti-piracy) operations, evacuating Chinese nationals in foreign countries when necessary, and conducting humanitarian assistance/disaster response (HA/DR) operations.” But the nation’s naval modernization effort is primarily oriented towards being able to address disputes with Taiwan militarily; defending territorial claims; regulating foreign military activities in China’s 200-mile maritime exclusive economic zone; displacing U.S. influence in the Western Pacific; and last but not least asserting China’s status as a leading regional power and major world power.

Keep in mind, as the late prime minister of Singapore Lee Kuan Yew pointed out, about one-third of all world trade passes through the South China Sea. And tensions in Asia are already high due to numerous territorial disputes and frictions — ranging from China’s relatively new and aggressive “Air Defense Identification Zone” in the East China Sea to the Spratly Islands and the “Nine-Dashed Line” in the South China Sea.

China, which is developing a true “blue water” navy, has been testing the nerves of its weaker neighbours, Vietnam and the Philippines in particular, because it intends to become the dominant military power in the region. Wary of China’s ambitions, other countries such as Japan, the United States, South Korea and Australia have been pushing back against Chinese muscle-flexing to some degree. Meanwhile, India is responding by scaling up its own navy.

It is important to note that four-fifths of China’s oil imports pass through the Andaman and Nicobar Islands, an obscure archipelago that stretches for hundreds of kilometres close to the mainland of Southeast Asia. And India is turning the area into a major military stronghold that could be deployed to choke off China’s energy and natural resource lifeline in the event of confrontation.

Even with these developments, the present risk in this region is more about incidents that might escalate dangerously than deliberate conflict. But that can quickly change when so many vital national interests converge.

Meanwhile, events in Ukraine can be directly linked to Moscow’s desire to regain as much of Russia’s former superpower status as possible while increasing its ability to assert its interests in the Arctic and beyond. And the same can be said of Russia’s large reinvestment in its submarine fleet. Indeed, the nation’s navy has been a source of power and national pride since the days of Peter the Great.

Simply put, the naval vessels, container ships and tankers being launched this year represent strategies that are at least a decade old. And as a result of these strategies, which are based on raw geopolitics and commercial calculus along with expectations of a new gold rush for previously inaccessible natural resources, the risk of international incidents escalating into military/naval confrontation is set to spike significantly in the not-too-distant future. After all, from the Arctic to the Pacific and Indian oceans, superpower and coastal states are making aggressive new claims on island chains and seaways and are investing heavily in the latest generation of naval hard power in order to be able to back up these claims militarily.

None of this should surprise anyone familiar with The Influence of Sea Power Upon History: 1660–1783, published in 1890 by Alfred Thayer Mahan, an American admiral, geostrategist and historian. Mahan’s thesis that a country’s influence on the world stage is directly related to the amount of naval power at its command has not been watered down by time. It is a driving force behind today’s naval arms races.

AND THEN THERE IS CLIMATE CHANGE

While most people regard climate change as a global-scale disaster, it actually presents countries bordering on the Arctic with new opportunities — not least of which is the ability to tap potentially massive, previously inaccessible mineral, oil and gas deposits. Arctic ice melt will also revolutionize supply chains. As a result, it is time for manufacturers to start thinking about how this might change the shipping vs. nearshoring vs. reshoring equation and how the moving parts of offshore labour costs, reduced costs of transportation and need for shorter supply chains will refigure around the new routes.

Since the 19th century, Arctic explorers have tried to cross the fabled and dangerous Northwest Passage by sea. A successful commercial crossing was finally made by the bulk carrier MS Nordic Orion thanks to ice melt in 2013. Corporate strategists and supply-chain experts must now plan for the revolution that will eventually follow this historic event.

New Northern routes could shave many days and thousands of nautical miles off the Asia–Europe trade route. East–West transit times could decrease by as much as 40 per cent, which would reduce fuel consumption (on the downside, carbon emissions north of 40°N are potentially more damaging than they are south of that latitude).

While the Northwest Passage has a glamourous ring to it, it may evolve into a “destination” shipping route — tapping into the natural resources industry and adventure tourism. Either way, large-scale shipping volume through the area is likely years away. After all, the region still needs the usual port and maritime infrastructure that seafarers depend on for safety, supplies and repairs. These, of course, represent immediate-term business opportunities. And with the idea of new port cities opening up and creating economic development on previously barren coastlines, there are unforeseen prospects here as well.

Potentially more viable emerging trade routes, of course, will probably see a much quicker uptick in large-scale shipping volumes. First and foremost is the Northeast Passage, the “Top of the World” route over Russia, which could potentially cut some 2,200 miles off Rotterdam–Vancouver voyages. It has already incited Russia to make impressive investments in maritime infrastructure across what it prefers to call the Northern Sea Route. This has helped increase commercial shipping there some twentyfold since 2010, with a future emphasis on serving Asia–Europe trade.

Compared with the Northwest Passage, the Northeast Passage and eventually the direct transpolar route are likely to emerge far sooner as economically viable transit passage routes. In any Northern shipping route evolution scenario, the Suez and Panama canals could see a significant drop-off in business.

Thanks to climate change, the world will also almost certainly see increased national rivalries over sovereign claims. Keep in mind that some 90 billion barrels of oil and 1.7 trillion cubic feet of natural gas are believed to be located in the Arctic, representing an estimated 13 per cent of the world’s undiscovered oil and 30 per cent of the world’s undiscovered gas.

Canada, which is investing billions in a substantially revamped navy with increased Arctic patrol capabilities, considers the Northwest Passage to be part of its sovereign waters. But that claim is widely disputed, even by NATO allies such as the United States, which views the route as an international strait open to unrestricted passage. Denmark and Norway are two other smaller regional players currently upgrading their naval capabilities. Denmark, which holds sovereignty over Greenland, shocked the world last year by presenting the UN with a sovereignty claim over the North Pole that included an adjoining strip of nearly a million square kilometres. That assertion is likely to be challenged by Canada, which is preparing its own claim to the region, not to mention Russia, which sent a submarine to plant a Russian flag marker beneath the North Pole in 2007.

NAVIGATING THE FUTURE

The world’s peace and prosperity sails more than ever before on salt water. And that fact has profound implications for the business world. Now is the time to explore the emerging opportunities that will come with climate change and the rising influence of seaborne economic activities. Now is also the time to plan for disruptions to any part of the maritime ecosystem, which could create a big, unexpected shock to national economies while imposing serious damage on private-sector operations.

As noted by Vice-Admiral Paul Maddison, former commander of the Royal Canadian Navy and a key contributor to Canada’s new Arctic naval strategy, a long list of ominous threats — ranging from contested claims to seabed resources to piracy and sophisticated contraband smuggling by international criminal organizations — already threatens “to rob coastal states of their rights to grow, to become more prosperous, and to contribute to making the global system stronger.”

With the rise of the new Maritime Age, the list of threats to worry about isn’t going to get shorter, so crisis planning is now more important than ever. Put yourself in the position of managers at McDonald’s Japanese operations, which had to start rationing French fries late last year thanks to labour issues at America’s West Coast ports, which are key to global supply chains because they handle nearly 45 per cent of all cargo entering and exiting the world’s largest economy.

But don’t stop there. Imagine a terrorist attack on the fibre-optic seabed cables that we never think about, but rely on every minute we’re cruising the web. If you don’t think that’s something you need to be concerned about, then Lt. General Russel L. Honoré (Ret.) — who led the U.S. military’s response to numerous crisis situations, ranging from the Washington, D.C., sniper spree in 2002 to the devastation and unrest caused by hurricanes Katrina and Rita in 2005 — thinks you should think again.

At a leadership conference hosted by the Ivey Business School in 2012, Honoré offered some advice that is useful for planning for the rising risks discussed above. After noting that attacks and accidents can happen anytime and anyplace, and that Mother Nature can destroy anything made by man, anytime and anyplace, he told conference attendees not to make the mistake of planning for just an imaginable bad scenario.

“My advice to you,” Honoré said, “is prepare for the worst” and “focus on logistics.”

As far as Honoré is concerned, every crisis plan should at least contemplate a total loss of power and communications, which he noted would turn back “the clock 80 years.” The general, of course, also warned against feeling overly secure with any crisis plan. This is because in his significant experience, “The first casualty in any emergency is the disaster plan.”

In short, when it comes to the opportunities and risks, not to mention the basic facts, related to rising seaborne activities, we landlubbers have a lot of thinking to do. Welcome to the new Maritime Age.