The Breaking Point and Vision
A submarine cable between Taiwan and the Philippines was severed – presumably during dredging operations, likely by mistake – disrupting data flow for millions of users. An incident, certainly. But my reading is that we are not witnessing a collapse of global infrastructures, but rather a forced recalibration, a transition from a centralized and fragile system to a more distributed, redundant network, inevitably more costly. Fragility is not a bug, it’s a feature of the old model.
Reverse Engineering the System: The Block Logistics
Focusing on block logistics, that cable was not just carrying data but also order flows, payment streams, and production coordination. The break highlighted dependence on critical nodes. But the response has not been immediate repair (which will take time), but activation of alternative routes via satellite and terrestrial links. This has triggered a rush to strengthen backup infrastructure, not only in terms of capacity, but also resilience. Companies like Starlink, which offer low Earth orbit satellite connectivity, are directly benefiting from this push. But the real move is subtler: diversification of submarine cable suppliers. China, which controls much of the production, is now seen as a systemic risk. Europe and the US are incentivizing local production capacity, even at higher costs. This is not just a technological issue but also geopolitical.
Money follows resilience. Investment funds are flowing towards companies offering redundancy and diversification solutions. But there’s a twist: the push toward decentralization is driven not only by fear, but also opportunity. Blockchain, for example, offers a way to create distributed and immutable data networks that could reduce dependence on submarine cables. However, widespread adoption is hampered by scalability issues and regulation. The real game is therefore not technology itself, but the ability to create a regulatory ecosystem that incentivizes innovation and resilience.
A clear case in point is the situation in the Red Sea, where attacks on containers have forced shipping companies to reroute their routes, extending delivery times and increasing costs. This crisis has accelerated the trend towards “nearshoring” and “friendshoring,” or relocalizing production in politically aligned countries. Vietnam, India, and Mexico are benefiting from this trend, while China is seeing its position as the world’s factory erode. This does not mean the end of globalization but a transformation. The future will be characterized by more regionalized supply chains that are more resilient and costly.
The New Geography of Power
The power map is being redrawn. Countries controlling alternative routes (like Egypt with the Suez Canal) are gaining influence. Companies offering resilience solutions (like Starlink) are becoming key players. But the real winner could be India, which has the potential to become an alternative manufacturing hub to China. However, India faces significant challenges, such as inadequate infrastructure and inefficient bureaucracy. The competition for control of supply chains is destined to intensify, leading to greater fragmentation of the global system. Official rhetoric speaks of “multilateralism,” but reality is a struggle for power among regional blocs.
The ongoing recalibration is not just economic, but also military. The war in Ukraine has demonstrated the importance of resilient supply chains for weapons and ammunition. The US and Europe are heavily investing in armament production, seeking to reduce dependence on Russia and China. This is leading to a new arms race that could further destabilize the global system.
Tactical Horizon and Conclusion
In the next six months, carefully monitor two indicators: the price of lithium (essential for Starlink batteries) and the number of construction permits for new data centers in Vietnam. These two data points will provide clear indications of where the system is moving. Fragility is the new normal. Adapting means accepting risk and investing in resilience.
Done.
Photo by Aimal Khan on Unsplash
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