UNCTAD Calls for Greater Investment in Maritime Supply Chains
UNCTAD’s Review of Maritime Transport 2022, an annual comprehensive review of global maritime transport, warns that the maritime sector will require greater investment in infrastructure and sustainability to weather future supply chain crises.
The UN Conference on Trade and Development (UNCTAD) in its flagship "Review of Maritime Transport 2022" has called for increased investment in maritime supply chains.
Ports, shipping fleets and hinterland connections need to be better prepared for future global crises, climate change and the transition to low-carbon energy.
The supply chain crisis of the last two years has shown that a mismatch between demand and supply of maritime logistics capacity leads to surges in freight rates, congestion, and critical interruptions to global value chains.
Ships carry over 80% of the goods traded globally, with the percentage even higher for most developing countries, hence the urgent need to boost resilience to shocks that disrupt supply chains, fuel inflation and affect the poorest the most.
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UNCTAD Secretary-General Rebeca Grynspan said: "We need to learn from the current supply chain crisis and prepare better for future challenges and transitions. This includes enhancing intermodal infrastructure, fleet renewal and improving port performance and trade facilitation.
"And we must not delay the decarbonization of shipping."
Investment is needed in maritime transport systems to strengthen global supply chains
Logistics supply constraints combined with a surge in demand for consumer goods and e-commerce pushed container spot freight rates to five times their pre-pandemic levels in 2021, reaching a historical peak in early 2022 and sharply increasing consumer prices.
The rates have dropped since mid-2022 but they remain high for oil and natural gas tanker cargo due to the ongoing energy crisis.
Dry bulk freight rates increased due to the war in Ukraine and related economic measures, as well as the prolonged COVID-19 pandemic and supply chain disruptions.
An UNCTAD simulation projects that higher grain prices and dry bulk freight rates can lead to a 1.2% increase in consumer food prices, with higher increases in middle- and low-income countries.
More investment required to cut carbon footprint of maritime transport
The report shows that between 2020 and 2021 total carbon emissions from the world maritime fleet increased by 4.7%, with most of the increases coming from container ships, dry bulk and general cargo vessels.
The report also raises concern over the increasing average age of ships. By number of ships, the current average age is 21.9 years, and by carrying capacity 11.5 years.
Ships are ageing partly due to uncertainty about future technological developments and the most cost-efficient fuels, as well as about changing regulations and carbon prices.
Investments in new ships that reduce greenhouse gas emissions will be hampered by surging borrowing costs, a darkened economic outlook and regulatory uncertainties.
UNCTAD calls for more investment in technical and operational improvements to cut the carbon footprint of maritime transport.
These include switching to alternative, low or zero-carbon fuels, optimizing operations, using on-shore electricity when in ports and equipping vessels with energy-efficient technology.
Measures to protect competition needed in the face of market consolidation
The report says the container shipping sector has been transformed by horizontal consolidation through mergers and acquisitions. Shipping carriers have also pursued vertical integration by investing in terminal operations and other logistics services.
Between 1996 and 2022, the top 20 carriers increased their share of container-carrying capacity from 48% to 91%. And over the past five years, the four largest carriers increased their market shares to control more than half of the global capacity.
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