Over the years, Sigma has posted several blogs relating to Freedom of the Seas. Our blog posted May 14, 2013, “Freedom of the Seas”, highlighted the risks to world trade posed by the existence of several choke points, including Gibraltar, Suez, and the Strait of Hormuz, to mention a few.
Historically, Great Britain maintained the freedom of the seas as a natural adjunct to its far-flung economic interests that depended on keeping world trade routes open.
At the end of WWII, the United States, with the largest blue water navy, was the logical successor to Great Britain’s role as the world’s policeman and guardian of freedom of the seas. A job we neither sought nor were particularly comfortable with.
It may be impossible, for economic and political reasons, for the United States to take up the role of maintaining freedom of the seas. However, with more than 20% of the world’s goods and services, the US has a significant interest in free access to the world’s trade routes.
Investors should understand the potential for new disruptions of world trade. Any material disruption in the normal flow of goods and services may result in temporary shortages and increased costs, making the Federal Reserve’s battle against inflation more difficult.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA
