Unctad: Global Seaborne Trade Is Recovering, But Many Challenges Remain
The United Nations Trade and Development Organization's Maritime Transport Review 2024 report, released on Tuesday, shows that global maritime trade will grow by 2.4 percent in 2023, recovering from a contraction in 2022. However, despite signs of recovery, the future growth of maritime transport remains fragile and faces many risks and uncertainties.
Geopolitical tensions, conflict and climate change are increasingly impacting vital shipping lanes around the world, seriously threatening the stability of global supply chains and putting particular pressure on vulnerable economies that rely on shipping, such as small island developing States and least developed countries.
The report highlights the growing problem of false ship registrations in recent years, posing a threat to global maritime safety, pollution control and crew welfare. The International Maritime Organization is investigating the issue.
The vulnerability of key shipping lanes has increased, and the supply chain is facing severe challenges
More than 80% of global trade is dependent on sea transport, but key shipping lanes such as the Suez Canal, Panama Canal and Red Sea are frequently affected by geopolitics and climate change, resulting in longer routes, higher costs and a greater risk of supply chain disruption, with profound implications for food security, energy supplies and the global economy.
According to the report, the volume of traffic in key canal routes around the world will be reduced by nearly half in 2023, and ships will be forced to circumnavigate the Cape of Good Hope in Africa, increasing transport costs and time. The extension of the route will not only increase fuel, wages, insurance and lease costs, but also lead to higher greenhouse gas emissions.
Global seaborne trade is picking up, but geopolitical and climate risks remain
According to the report, global seaborne trade grew by 2.4% to 12.3 billion tonnes in 2023, reversing the contraction in 2022. Seaborne trade is expected to grow by 2% in 2024 and continue to grow at an average annual rate of 2.4% until 2029. However, the "extremely challenging operating environment" caused by geopolitical conflicts and climate change remains a constraint on the long-term recovery of seaborne trade.
The report notes that while demand for iron ore, coal and grains remains strong, growth in container traffic in 2023 remains sluggish. At the same time, due to the growth of trade and the extension of routes, the number of container ships in the second half of 2023 set a record of nearly 250,000 port calls, and some Asian ports have experienced severe congestion.
Higher freight costs fuel inflation and threaten global growth
According to the report, due to factors such as extended routes, port congestion and increased operating costs, global ocean freight rates will continue to rise in 2024. If freight rates continue to rise, it will push up global consumer prices, with higher transport costs adding 0.6 per cent to global consumer prices by 2025, UNCTAD expects.
The report shows that the impact of higher transport costs is particularly severe for vulnerable economies dependent on sea transport, especially small island developing States, which can lead to reduced trade competitiveness and economic stability in these countries, and increase the risk of inflation. By 2025, consumer prices in these countries could rise by 0.9% and processed food prices by 1.3%, jeopardizing food security.
Accelerate the process of decarbonization and address climate challenges
According to the report, the shipping industry accounts for 3% of global greenhouse gas emissions, but the pace of replacement of the world's aging fleet remains slow. Despite the increasing pressure, there is still a long way to go to decarbonize the shipping industry due to high costs, uncertainty about future fuels and low ship scrapping rates.
The report highlights a 3.4% increase in the global fleet in 2023, with a total transport capacity of 2.4 billion tonnes, mainly driven by container ships and liquefied natural gas carriers. However, bulk carriers and oil tankers still account for the largest market share. However, at a time when sustainable development is increasingly valued, failure to accelerate the decarbonization process could lead to higher shipping costs, increased regulatory fines, and reduced market competitiveness.
The report shows that global shipbuilding trends will also influence the process of fleet renewal. In 2023, China, Japan and South Korea dominated the shipbuilding market, producing 95% of the world's new ship production, with China accounting for more than half of global capacity for the first time.
Promote digitization of ports to improve shipping efficiency
The Maritime Review points out that the key to improving port efficiency lies in digital applications such as blockchain, artificial intelligence and automation technology. These technologies can reduce waiting times, improve cargo tracking capabilities and improve transit efficiency. The region has made significant progress in digital port management and is now able to efficiently handle 63 percent of the world's container port operations.
At the same time, Africa is also promoting port and trade facilitation reforms. East African countries such as Ethiopia and Kenya have eased port congestion and improved trade flows by investing in inland ports. The Caribbean, on the other hand, faces high operating costs and aging infrastructure, which will not only weaken its global trade competitiveness, but also make it more vulnerable to climate change.
The report calls on the global shipping industry to strengthen measures to address the risks of climate change, including assessing the risks of damage, delay and disruption to port and shipping infrastructure. The report emphasizes the importance of proactive action before climate risks and losses occur to reduce losses, avoid legal disputes, and ensure unimpeded global trade and affordable insurance.
