Global maritime supply chains need a boost to be future-ready: UNCTAD

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, as per UNCTAD flagship publication ‘Review of Maritime Transport 2022’.

Ships carry over 80 per cent 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, according to the data released in the publication’s report.

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.

UNCTAD called on countries to carefully assess potential changes in shipping demand, develop, and upgrade port infrastructure and hinterland connections while involving the private sector. They should also bolster port connectivity, expand storage and warehousing space and capabilities, and minimise labour and equipment shortages, as per the report.

Many supply chain disruptions can also be eased through trade facilitation, notably through digitalisation, which cuts waiting and clearance times in ports and speeds up documentary processes through e-documents and electronic payments, UNCTAD’s report further suggested.

More investment is required to cut the carbon footprint of global maritime transport. The report showed that between 2020 and 2021 total carbon emissions from the world maritime fleet increased by 4.7 per cent, with most of the increases coming from container ships and general cargo vessels.

Investments in new ships that reduce greenhouse gas emissions will be hampered by surging borrowing costs, a darkened economic outlook, and regulatory uncertainties, as per the report.

UNCTAD urged the international community to ensure countries that are most negatively affected by climate change – and have contributed the least to its causes – are not negatively affected by climate mitigation efforts in maritime transport.

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 per cent to 91 per cent. And over the past five years, the four largest carriers increased their market shares to control more than half of the global capacity, the report said.

UNCTAD called on competition and port authorities to work together to respond to industry consolidation with measures to protect competition. The report urged stronger international cooperation on cross-border, anticompetitive practices in maritime transport, based on the UN Set of Competition Rules and Principles.

Fibre2Fashion News Desk (DP)