UNCTAD’s 2019 maritime review keeps projected seaborne growth projections in check
Lacklustre seaborne trade growth figures should serve as a “warning” that national policies can have a negative impact on the maritime trade and development aspirations of all.
UNCTAD secretary-general Mukhisa Kituyi made that comment in response to growth of just 2.7% in 2018, down from 4.1% in 2017 – the headline figure of the United Nations’ latest Review of Maritime Transport 2019 (RMT).
Containerised trade growth was particularly hard hit, falling from 6% in 2017 to 2.6% in 2018.
Mr Kituyi blamed the dip in maritime trade growth on several trends including “a weakening multilateral trading system and growing protectionism”.
In a five-year projection window, UNCTAD sees international maritime trade increasing by 2.6% in 2019 and then continuing to rise at a compound annual growth rate of 3.4% over the 2019-2024 period. The UN body bases these figures on the estimated income elasticity of maritime trade over the 2006-2018 period and the latest growth in GDP forecast by the International Monetary Fund for 2019-2024.
This projected growth falls within the range of some existing forecasts and is consistent with historical trends: maritime trade increased at an annual average growth rate of 3.4% between 2006 and 2018.
In sector-specific forecasts, containerised and dry bulk trades are expected to grow at a compound annual growth rate of 4.5% and 3.9% respectively over the 2019-2024 period. Tanker trade (combined crude oil, refined petroleum products, gas and chemicals) is projected to grow by 2.2% during the same period.
“Uncertainty remains an overriding theme in the current maritime transport environment,” the report said.
Growth will also be affected by trends in market segments that suffered setbacks in early 2019, including disruptions to iron ore trade caused by Cyclone Veronica in Australia and the severe disruption caused by the Vale dam incident in Brazil.
Grain and containerised trades, meanwhile, will be hardest hit by ongoing trade tensions, while crude oil shipments from the Atlantic basin to Asia are expected to support tanker volumes. However, it is unlikely that this will offset sanctions on Iran and Venezuela, and production cuts by the Organization of the Petroleum Exporting Countries, which are all likely to put pressure on tanker trade.
“Overall, the outlook for global maritime trade growth will be affected by the degree and speed at which some of these trends unfold,” said UNCTAD.
This year’s RMT raises particular concern about the effect of regionalisation of trade flows and the trend towards restructuring supply chains, recommending the following actions:
- Close monitoring of demand side risks and assessment of their implications for maritime transport and trade of developing countries;
- Favouring of measures that help boost economic growth, support trade, strengthen resilience and foster environmental sustainability;
- Revitalisation of trade growth and promotion of the participation of developing countries in global value chains;
- Encouragement of product and market diversification to better cope with adverse trade shocks, including the impacts of heightened tariffs and trade tensions;
- Adoption of a co-ordinated and multilateral approach to resilience building, including addressing the risks of natural disasters and the impacts of climate change;
- Promotion of better planning methods and approaches to ensure more flexibility when dealing with uncertainties and rapid shifts in production, trade and shipping patterns; and
- Fostering policies that anticipate potential disruptions and associated response measures that are tailored to countries’ developmental challenges and needs.
There have also been significant changes on the ship supply side noted in the latest RMT, with carriers abandoning their “quest for ever bigger ships” and instead “increasingly eyeing growth prospects associated with the landside of operations”.
Ports and shipping interests, UNCTAD notes, are focusing more attention on expanding activities to inland logistics and tapping potential underlying sources of revenue. “Efforts by carriers to emerge as freight integrators and recent moves by some major global container lines to acquire regional carriers could be indicative of industry efforts to adapt to changing conditions,” says the report.
In early 2019, the total world fleet stood at 95,402 ships, representing 1.97 billion dwt. Bulk carriers and oil tankers maintained the largest market shares of the world fleet at 42.6% and 28.7% respectively.
Total capacity has grown by 2.6% compared with the beginning of 2018. That said, the capacity growth rate has been declining since 2011, except for a slight increase in 2017, and remains below the trend for the past decade.
One notable bright spot in the report is the expanding liquefied natural gas (LNG) sector, largely off the back of the widescale promotion of cleaner energy sources. In fact, a sharp decline in oil trade growth has been partly offset by rapidly expanding LNG and LPG trade growth. In China alone, LNG imports increased by over 40% in 2018.
LNG trade growth led gas carriers to be the “most dynamic segment of the world fleet” in 2018, experiencing the highest growth rate of 7.25% of dwt. UNCTAD expects this supply-side trend to continue given heightened environmental concerns and the pressure of the maritime sector to switch to cleaner fuels.
Summarising the sentiment of the 2019 report, UNCTAD commented that a “new normal” for maritime transport is in the making, with effects permeating all aspects of the industry, from demand to supply, markets, ports and regulatory frameworks.