Although the impact of the COVID-19 pandemic on maritime trade last year was less severe than expected, the ripple effects will be significant and could transform the sector, the United Nations body said. trade and development, UNCTAD, in its latest report, released on Thursday.
Maritime trade contracted 3.8% in 2020, but rebounded thereafter, and is expected to increase 4.3% this year, according to the report.
UNCTAD Maritime Transport Review 2021 reveals that the medium-term outlook remains positive but subject to ‘growing risks and uncertainties’, such as unprecedented pressures on global supply chains, dramatic spikes in freight rates and price increases affecting both consumers and importers.
Deployment of the critical vaccine
The agency said the global socio-economic recovery will depend on smart, resilient and sustainable shipping, and a global COVID-19 vaccination effort that will allow developing countries to have more equitable access. in doses.
“A sustainable recovery will depend on the trajectory of the pandemic and will largely depend on the ability to mitigate headwinds and a global deployment of the vaccine,” said Rebeca Grynspan, Secretary General of UNCTAD.
“The impacts of the COVID-19 crisis will hit Small Island Developing States (SIDS) and Least Developed Countries (LDCs) the hardest” she added.
As UN chief António Guterres has repeatedly pointed out, COVID-19 has exposed many social inequalities.
Existing challenges exposed
UNCTAD said the pandemic has also exposed and amplified existing challenges in the shipping industry, especially labor shortages and infrastructure needs.
The agency called for urgent action to resolve the plight of hundreds of thousands of sailors who remain stranded at sea due to the pandemic, as blockages, border closures and lack of international flights have affected replacements and crew repatriations.
The report says industry, governments and international organizations must ensure that seafarers are identified as key workers and vaccinated as a priority.
The report examines the factors that drive up consumer prices.
Logistical challenges, soaring rates
The rebound in maritime trade has been marked by “pandemic-induced logistical challenges” such as equipment and container shortages, less reliable services and congested ports. The resulting supply chain bottlenecks have hampered economic recovery.
There are also challenges on the supply side. Although orders for new container ships fell 16% last year, continuing a previous downtrend, shipping lines have increased orders for new ships this year against the backdrop of current capacity limitations.
Shipping companies have benefited from skyrocketing freight rates, according to the report.
Surcharges, fees and tariffs temporarily increased even more after the grounding of the Ever Given, the massive container ship that blocked the Suez Canal last March, disrupting global trade.
UNCTAD has warned that import and consumer prices “will increase dramatically” if the surge in container freight rates continues.
Monitor market behavior
His analysis showed that world import price levels will increase by an average of 11 percent, and up to 24 percent for SIDS, which depend mainly on maritime transport for imports.
If the situation continues, consumer prices could increase by 1.5% in 2023. The increase is expected to be 7.5% in SIDS and 2.2% in LDCs.
UNCTAD stressed the need to monitor market behavior and ensure transparency when it comes to setting rates, fees and surcharges.
The report also examines how the pandemic has accelerated ‘megatrends’ that could transform shipping, such as digitization and automation, which is expected to lead to efficiency and cost savings.
Building climate resilience
The shipping industry is also grappling with climate adaptation and resilience, although the urgent need to decarbonize and find alternative fuels to reduce emissions comes at a cost.
“By exposing the vulnerabilities of existing supply chains, the disruption of COVID-19 has heightened the need to build resilience and reignited the debate on globalization and future supply chains,” said Shamika N. Sirimanne , Director of Technology and Logistics at UNCTAD.