Chennai, 30 Dec 2020:
The pandemic has sent shockwaves through global maritime transport and laid the foundations for a transformed industry and associated supply chains. UNCTAD expects a return to growth in 2021
Global maritime trade will plunge by 4.1% in 2020 due to the unprecedented disruption caused by COVID-19, UNCTAD estimates in its Review of Maritime Transport 2020, released on 12 November.
The report warns that new waves of the pandemic that further disrupt supply chains and economies might cause a steeper decline. The pandemic has sent shockwaves through supply chains, shipping networks and ports, leading to plummeting cargo volumes and foiling growth prospects, it says.
According to the report, the short-term outlook for maritime trade is grim. Predicting the pandemic’s longer-term impact as well as the timing and scale of the industry’s recovery is fraught with uncertainty.
“The global shipping industry will be at the forefront of efforts towards a sustainable recovery, as a vital enabler of the smooth functioning of international supply chains,” UNCTAD Secretary-General Mukhisa Kituyi said. “The industry must be a key stakeholder helping adapt ‘just-in-time efficiency’ logistics to ‘just-in-case’ preparedness,” he added.
UNCTAD expects maritime trade growth to return to a positive territory and expand by 4.8% in 2021, assuming world economic output recovers. But it highlights the need for the maritime transport industry to brace for change and be well prepared for a transformed post-COVID-19 world.
As shipping companies prepare to release their third-quarter results, there are very few alarm bells ringing that the industry is suffering any great adverse impact from the coronavirus pandemic.
Global containerised trade was up 2.7% in the July-September period, compared with the year-earlier period, and the year-to-date volume is just 3% behind the equivalent period in 2019 following a 6.9% rise in September, the second consecutive month of growth.
The dry bulk market has been volatile this year in comparison, but China’s massive infrastructure investment and resulting hunger for raw commodities such as iron ore and coal, as well as soyabeans to boost national reserves, has kept earnings at a reasonable rate throughout.
Against this largely positive picture for 2020, though, there are some dark clouds that could potentially see a shift in outlook for 2021 and beyond.
This is based on the assumption that the pandemic will be brought under control and economies return to something like normal. China’s v-shaped recovery is a positive sign following the initial outbreak there, while news of a potential vaccine ready in the coming weeks (revealed after the IMF estimates) has already buoyed stock markets.
But with the second wave of the virus still rampant in Europe and elsewhere, with high levels of unemployment and reduced demand for goods and energy products a likely result, there is no guarantee that a vaccine will be the panacea to the economic woes.
A lack of new orders and deliveries for ships, and an acceleration in scrapping, has also helped to keep a lid on capacity growth and maintained the delicate market equilibrium. But with new orders expected to jump in 2021, any small change in fleet size could have an impact on market rates by the time they hit the water.
Even in the best-case scenario on the global economy, there will only be a return to growth in the second half of 2021, while many developing nations are expected to recover much more slowly. With this in mind, despite the positives from 2020, shipping must continue to proceed with extreme caution.
The annual Lloyd’s List Outlook Forum has established itself as the agenda-setting event of the maritime calendar, gathering an exclusive panel of the industry’s leading lights with Lloyd’s List and Lloyd’s List Intelligence’s experts to directly answer the critical questions shaping the maritime markets.
This digital event will look at key issues such as how to recover from the aftermath of a global pandemic, while also grappling with strategic dilemmas such as decarbonisation and digitalisation.
The pandemic has also exposed how unprepared the world seemed to be in the face of such a crisis, the report observes, underscoring the urgent need to invest in risk management and emergency response preparedness in transport and logistics.
It says future-proofing the maritime supply chain and managing risks requires greater visibility and agility of door-to-door transport operations.
Many trade facilitation measures taken during the pandemic require further investments in digitalization and automation. Accepting digital copies instead of paper originals, pre-arrival processing, electronic payments and customs automation all help speed up international trade.
On the flip side, the pandemic has also highlighted that digitalization comes with increased cyber security risks with a potential to cripple supply chains and services in global maritime trade.
The report decries the humanitarian and safety crisis caused by the pandemic, when more than 300,000 seafarers were stranded at sea for months beyond the end of their contracts – an unsustainable situation for both the safety and wellbeing of seafarers, and the safe operation of ships.
UNCTAD reiterates its call to authorities to designate seafarers as key workers exempted from COVID-19 travel restrictions.
Much of the uncertainty is of course related to the global economy and how long the coronavirus pandemic will last. According to the International Monetary Fund’s latest forecast, China is the only major economy expected to record GDP growth this year but other markets will see a significant bounce back in 2021.