Defensive record
Whilst 2018 saw the global maritime shipping industry suffer a growth downturn, Unctad has ascertained light on the horizon for the years through to 2024. The political framework will not improve, however, and change in the industry will speed up further.
The United Nations Conference on Trade and Development (Unctad), headquartered in Geneva, recently published the 2019 edition of the Review of Maritime Transport, its annual report on the shipping industry. It traces developments in maritime transport, the global commercial vessel fleet, rates, markets and ports, as well as in the overall legal and regulatory framework.
A slump in 2019
The report includes an analysis which concludes that global maritime trade lost a degree of its impetus in 2018. Volumes grew by 2.7%, but remained stuck below the historic average of 3% attained in the past few decades, as well as below the 4.1% achieved in 2017.
Estimates nevertheless have it that a total volume of approximately 11 billion t of goods was transported – an all-time high. The Geneva-based organisation expects growth for 2019 to decline slightly to 2.6%, but for the long term has predicted an average annual growth rate of 3.4% for the period through to 2024.
Unsurprisingly, Unctad’s report also decries the industry’s ongoing uncertainties. “Apart from trade policy crosscurrents, geo-political flare-ups as well as sanctions, some of the other issues that made the headlines included environmental concerns, fuel economics and tensions involving the Strait of Hormuz – a strategic maritime bottleneck.” On top of this the report also criticised world trade’s all-too-strong dependence on China; the country has accounted for almost half of the growth in global maritime trade over the past ten years. Exports from China are estimated to have accounted for fully one quarter of global maritime trade in 2018.
Unctad knows that the development of the Chinese economy plays a key role in global maritime trade, but the latest agenda for reforms in the Middle Kingdom worries the executives in Geneva. They have perceived a shift from investment and production-based growth towards consumer expenditure and services.
Trends in the new normal
Unctad has concluded from these latest developments that ongoing uncertainties do not represent a transition period for the sector, but that this is rather the industry’s new normal. Low growth in the global economy and worldwide trade results in a series of trends, not all of which are new.
It hardly comes as a surprise then that trade flows and thus supply chains are becoming ever more regional and technologies and ecological sustainability are both playing an increasingly important role. The sea changes the industry has already experienced in the past, in contrast, will be further intensified. Carriers will increasingly seek growth opportunities outside of their traditional field of services, perhaps engaging in overland or domestic logistics activities with the potential to generate additional sales.
Unctad has drawn positive conclusions from “shipping lines’ overall efforts to become freight integrators” as much as it has from the efforts of some global container shipping lines to buy regional lines. Unctad cites this as “proof of the industry’s efforts to adjust to changed circumstances.”
It remains to be seen, however, whether this represents too little, too late.
