UNCTAD's Review of Maritime Transport 2022

Maritime transport essential items like food and medicine cannot flow, key supply chains for energy and commodities cannot function, and affordable prices are almost impossible to maintain.

But – for the last two years – the maritime industry has suffered from tremendous disruption. COVID-19, the war in Ukraine, Climate change and geopolitics have clogged ports, pushed up prices and closed entire shipping routes.

The logjam in global logistics has affected all of us.

Those especially hard-hit are the economies far from the main lines of trade – small island developing states, landlocked developing countries, and some countries in Africa and Latin America have also suffered.

To ensure global trade benefits all, we need to be better prepared to cope with shocks to global supply chains.

We need the maritime industry to improve efficiency, invest in infrastructure and reduce its carbon footprint.

This report comes with four key messages for policymakers and the millions of people who work in the shipping trade and make the essential lifeline of maritime trade possible.

First, some important data updates:

Maritime trade recovered in 2021, but for 2022 and beyond faces a complex operating environment fraught with risk and uncertainty

International maritime trade bounced back strongly in 2021 with an estimated growth of 3.2 per cent, following a 3.8 per cent decline in 2020.

Growth was driven primarily by increases in demand for container cargo. Fiscal stimulus packages in major economies, coupled with lockdowns, resulted in a high demand for goods rather than services, which drove the growth in this area.

As a result, container freight rates also rose last year. Freight went up seven-fold between October 2019 and January 2022.

For 2022, UNCTAD projects maritime trade growth to moderate to 1.4 per cent, and for the period 2022–2027 to expand at an annual average of 2.5 per cent, a slower rate than the previous three-decade average of 3.3 per cent.

These projections are the consequence of strong macroeconomic headwinds. In addition, faced with rising inflation, consumers are spending less, while also switching back expenditure from goods to services as COVID-19 lockdowns ease. Geopolitical tensions and the war in Ukraine are adding to these downturn projections.

As a result of this, freight rates have also dropped since the second half of this year. Increased capacity not matched by increased demand – with the onset of the global economic slowdown – is a leading reason why. Also, key port bottlenecks (such as the one we saw last year in Los Angeles) have eased in recent months.

However, container spot rates are still one third higher than the pre-covid long-run average. And freight rates remain high for oil and gas tankers due to the energy crisis.

We think that in the medium to longer term freight rates will remain higher and more volatile than pre-covid averages, given increasing geopolitical uncertainty, extreme market consolidation, and patchy environmental regulation. I will refer to this in a minute.

Maritime industry can play a key role in alleviating the current cost-of-living crisis, by helping us implement the two Istanbul grain and fertilizer agreements, that we signed this year with Ukraine, Türkiye, and the Russian Federation.

Shipping can bring prices down and ensure the world has enough food and fertilizer next year.

UNCTAD – particularly our teams working on maritime logistics – has supported these initiatives with data, intelligence, analysis, and policy guidance.

But much more needs to be done.

This review calls for stronger transport infrastructure, improved connectivity, expanded warehouses and fewer shortages of labour and equipment.

In short, we need to tackle the many sources of inefficiencies at ports and in land transport networks.

This review also calls for better implementation of transport and trade facilitation solutions at ports and borders.

At UNCTAD, we work very closely on facilitation through different programs on ports and customs like ASYCUDA and the ports management program. These are our largest technical assistance projects going to really dozens of countries around the world.

This report also calls for a faster transition to smart and green logistics systems and to the widespread use of electronic documents in international trade.

All of these are solutions to reduce logistic costs, which in turn translate into lower prices for the world.

This is not rocket science, very concrete things can be realized with political will and with the necessary financing to take on board the needs of the countries to make this happen.

To succeed, we must work hand-in-hand with the private sector and the international community to ensure that the necessary investments are in place.

And you can count on UNCTAD every step of the way, as we have a program of technical cooperation for basically every single hurdle in the supply chain. From customs to port management, from trade facilitation to data collection.

Our third point in the report is this: “We need a resilient maritime industry for a more resilient world”.

The international community must mobilize resources for a long-term vision that promotes a resilient and sustainable maritime supply chains, especially in developing countries.

This entails five very concrete things.

First, building capacity in agile and resilient maritime transport systems. Second, investing in risk management and emergency response.

Third, bringing more women into the port industry. Among other things, this will help to deal with labour shortages that contribute to port congestion.

Fourth, creating more competition. Over the last 25 years, the top 20 carriers have increased their market share from 48 per cent to 91 per cent, almost double. Such concentration can lead to abuse of market power, constrained supply, and higher rates for shippers worldwide.

Fifth, and finally, to build resilience, we need to avoid a fragmented trade system.

Our final point in this review is that we need to support the maritime industry’s transition to a low-carbon future.

You know, we are just coming out of COP27, so, we need to stress this point very much because the report shows that, between 2020 and 2021, carbon emissions from the world maritime fleet rose by almost 5 per cent.

That number is heading in the wrong direction if we hope to meet the global climate goals.

We are also concerned about ageing ships, and what that means for the environment as ships pollute more as they get older.

We need a whole new generation of ships – ships that can use the most cost-efficient fuels and can integrate seamlessly with smart digital systems.

To support the industry, ports and ship owners need predictable global rules. We understand that.

In terms of green and climate regulation, we must move from the many and messy rules we have now to one system that can be good for all.

Universal and predictable regulation is key to encouraging investment, mobilizing finance, strengthening collaboration, and harnessing the opportunities of the energy transition.

This is critical given a highly uncertain environment with conflict risks, the resetting of supply chains and the unknown prices of carbon in the future.

The sooner that national policymakers and international negotiators deliver predictable multilateral regulations, the sooner the shipping industry will advance with the necessary investments.