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The report warns that new waves of pandemics that further disrupt supply chains and economies could cause a more marked decline. The pandemic has sent shockwaves through supply chains, shipping networks and ports, leading to a collapse in freight volumes and thwarting growth prospects, he says.
According to the report, the near-term outlook for shipping is bleak. The prediction of the long-term impact of the pandemic, as well as the timing and extent of the sector’s recovery are fraught with uncertainty.
“The global maritime industry will be at the forefront of efforts towards sustainable recovery as an essential element of the smooth functioning of international supply chains,” said UNCTAD Secretary General Mukhisa Kituyi. “The industry must be a key player helping to adapt just-in-time efficiency logistics to just in case preparation,” he added.
UNCTAD expects maritime trade growth to return to positive territory and expand by 4.8% in 2021, assuming global economic output picks up. But it highlights the need for the shipping industry to prepare for change and be well prepared for a transformed post-COVID-19 world.
At the height of the crisis, when shrinking cargo volumes brought a further challenge to the structural imbalance of the market, the report notes, the container shipping industry adopted greater discipline, cutting capacity and reducing costs to maintain profitability rather than market share.
As a result, freight rates remained stable despite depressed demand. From the shipper’s point of view, these strategies have resulted in severe space constraints for freight transport and delays in delivery dates.
To address disruptions related to the pandemic, maritime industry operators have adjusted their operations, finances, health and safety protocols, as well as work practices and procedures. In addition, several governments, through their border agencies, port authorities and customs administrations, have adopted reforms to keep the flow of trade while keeping people safe.
“Border agents, port workers and customs authorities play an essential role in keeping trade moving, helping us to overcome the crisis,” said Dr Kituyi. “It will be important to evaluate the best practices that emerge from their experiences to strengthen trade facilitation in the years to come.”
Although COVID-19 underscored the global interdependence of nations, it raised existential questions about globalization and added weight to push back against outsourcing from distant places, the report said. “The pandemic has focused on shortening the supply chain, including nearshoring and reshoring, with less reliance on just-in-time and lean inventory models,” the report said. COVID-19 has also brought to the fore the debate on diversifying manufacturing and manufacturing sites and suppliers, it adds.
The pandemic also highlighted how unprepared the world seemed to face such a crisis, the report noted, highlighting the urgent need to invest in risk management and emergency response preparedness in transport and logistics. He says future-proofing the maritime supply chain and managing risk requires increased visibility and agility of door-to-door transport operations.
UNCTAD’s director of technology and logistics, Shamika N. Sirimanne, said the pandemic should not push into the background to combat climate change in shipping. Therefore, post-COVID-19 recovery policies should support further progress towards green solutions and sustainability. “The momentum of current efforts to address carbon emissions from shipping and the ongoing energy transition from fossil fuels should be maintained,” he said.
The pandemic has also strengthened the rationale for digitization and elimination of paperwork in the maritime sector, including in ports, the report notes, reinforcing the need for standards and interoperability in electronic documentation. Many trade facilitation measures taken during the pandemic require further investment in digitalization and automation. Accepting digital copies instead of paper originals, processing before arrival, electronic payments, and customs automation help accelerate international trade.
On the flip side, the pandemic also highlighted that digitization poses greater cybersecurity risks with the potential to paralyze supply chains and services in global maritime trade.
The report denounces the humanitarian and security crisis caused by the pandemic, when more than 300,000 seafarers were stranded at sea for months after their contracts expired – an unsustainable situation both for seafarers’ safety and well-being, as well as for safe operation. of the ships. UNCTAD reiterates its call to authorities to designate seafarers as key workers exempt from COVID-19 travel restrictions.
In addition to focusing heavily on the impact of the pandemic during 2020, the report provides in-depth and detailed coverage of global maritime trade in 2019. COVID-19 is said to have affected world trade after an already weak 2019, in which trade Global shipping lost further momentum as trade tensions continued to bite.
They included China-US tensions, Brexit uncertainties, complaints filed by several countries against Indian tariffs, the Japan-Korea trade dispute, and general moves towards protectionism. The report estimates that the tariffs reduced the volume of maritime trade by 0.5% in 2019.
Other important facts and figures about global maritime trade in 2019 include the following:
- Iron ore trade declined for the first time in 20 years, by 1.5%, due to disruptions such as the Vale Dam collapse in Brazil and Cyclone Veronica in Australia.
- Brazil has overtaken the United States as the largest maritime grain exporter in the world.
- As of March 2020, 20% of global trade in intermediate product manufacturing is estimated to have come from China, up from 4% in 2002.
- The use of larger container ships often increases the total costs of transport along the supply chain. The capacity of the largest container ship increased by 10.9%, but it is mainly carriers that benefit from the economies of scale offered by the larger vessels, while ports and inland transport providers do not necessarily benefit.
- Ports are showing increased interest in strengthening inland links to move closer to docked shippers and cargo volumes, in line with the push towards port-centric solutions in recent years.
- China, Greece and Japan remain the top three ship-owning countries in terms of cargo capacity, accounting for 40.3% of world tonnage and 30% of the global fleet value.
- Liberia, Marshall Islands and Panama remain the three main registration flags, in terms of carrying capacity and value of the registered fleet. As of January 1, 2020, they accounted for 42% of the cargo capacity and 33.6% of the fleet value.
- The flags of Iran, Taiwan (province of China) and Thailand recorded the largest increases in terms of gross tonnage. The number of ships flying the flag of Iran has quadrupled, due to pressure from sanctions, which has led several registries to remove the flag from ships associated with the trade involving the country.
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