The COVID-19 pandemic disrupted maritime transport in 2020 but the outcome was less damaging than initially feared. Though volumes fell less dramatically than expected and by the end of the year rebounded, laying the foundations for a transformation in global supply chains and new maritime trade patterns, according to the latest report of UNCTAD, the UN trade and development body.
The UNCTAD’s Review of Maritime Transport 2021 report said that maritime trade fell by 3.8 per cent in 2020, but later rebounded, and is estimated to increase by 4.3 per cent this year. The report further stated that there was a nascent, if asymmetric, recovery that put in the second half of the year and volumes had returned for both containerized trade and dry bulk commodities by the third quarter.
The UNCTAD said that maritime trade performed better than expected because the COVID-19 pandemic unfolded in phases and at different speeds, with diverging paths across regions and markets. It mentioned that the rebound was also the result of large stimulus packages, and increased consumer spending on goods, with a growth in e-commerce, especially in the United States. Moreover, the rebound was swift, as the downturn was not synchronized across the world unlike the global financial crisis of 2009.
The UNCTAD pointed out in the report that global socioeconomic recovery will depend on smart, resilient and sustainable maritime transport, and a worldwide COVID-19 vaccination effort that sees developing countries having fairer access to doses. UNCTAD Secretary-General Rebeca Grynspan said; “A lasting recovery will depend on the path of the pandemic and largely hinges on being able to mitigate the headwinds and on a worldwide vaccine roll-out. The impacts of the COVID-19 crisis will hit Small Island developing States (SIDS) and least developed countries (LDCs) the hardest.”
HUMANITARIAN CRISIS FOR SEAFARERS
Though the carriers managed to mitigate the crisis, port and landside operations found it more difficult to adjust. Moreover, seafarers were in a precarious situation. The health risks and related travel restrictions meant that hundreds of thousands of seafarers could not return home, while an equivalent number were unable to join their ships and to provide for their families.
The report stated that shipments of crude oil, refined petroleum products and gas together fell by 7.7 per cent. However, the impact was less for dry bulk commodity trade, which was mainly because of the strong demand from China for iron ore and. The UNCTAD stated that global container port fell at a roughly similar rate – and in 2020 totalled 815.6 million twenty-foot equivalent units (TEU).
LOGISTICAL CHALLENGES, SOARING RATES
The report finds that emerging multi-paced recovery is inherently fragile as many countries and regions continue to lag. It said that the resulting supply chain bottlenecks have hindered economic recovery. The report pointed out that orders for new container ships dropped by 16 per cent last year. Shipping lines have benefitted from soaring freight rates. Surcharges, fees and rates temporarily rose even higher following the grounding of ‘Ever Given’, the huge container ship that blocked the Suez Canal disrupting global trade.
SMALLER PLAYERS AND PRICES
A surge in surcharges and fees, including demurrage and detention fees are a challenge for all traders and supply chain managers, especially for smaller shippers. The smaller shippers may be less able to absorb the additional expense and are at a disadvantage when negotiating rates and booking space on ships.
Higher container freight rates will also have a sizeable impact on consumer prices. If container freight rates remain at their current high levels, then in 2023 global consumer prices are projected to be 1.5 per cent higher than they would have been without the freight rate surge. The impact is expected to be more significant for smaller economies that depend heavily on imported goods for much of their consumption needs. The UNCTAD report also puts forth that some of the goods will be affected more than others by the surge in container freight rates. The Most affected are the goods manufactured through integrated supply chains, it added. Higher shipping costs will also affect some low-value-added products for furniture and textiles, garments and leather products.
OPERATIONS FOR SHIPS AND PORTS
With the terminal operators and other authorities taking much COVID 19 precaution, ships had to spend more time in ports that were operating more slowly. Dry break bulk carriers experienced the greatest delays
Women tend to be better represented in management and administrative roles, for which between 2019 and 2020 the proportion of women increased from 38 to 42 per cent. Asian members were above average at 52 per cent compared with those in Europe at 39 per cent. Women are far less likely to be working in cargo handling port operations.
Noting that the shipping industry also has an important part to play in combating climate change, the UNCTAD stated that investing in adaptation and building resilience- for seaports and other key transport infrastructure, especially in developing countries, would help in the endeavour.
PRIORITIES FOR ACTION
The UNCTAD has highlighted the following priorities
- Vaccinate the world
- Revitalize the multilateral trade system
- End the crew-change crisis
- Vaccinate seafarers
- Facilitate crew changes
- Ensure reliable and efficient maritime transport
- Mainstream supply chain resilience risk assessment and preparedness
- Control costs
- Climate proof maritime transport