The United Nations Conference on Trade and Development (Unctad) on 07 November released its “Review of Maritime Transport” noting that even though seaborne shipments passed 10 billion tons for the first time ever in 2015, up 2.1% from 9.8 billion tons in 2014, this was the slowest pace of growth in the industry since 2009. It also expressed concern that future growth looked uncertain.
Shipping carried more than 80% of the world's goods by volume in 2015, and its slow growth reflects sluggish global trade, albeit with variations in the different sectors.
Shipping of oil recorded its best performance since 2008, thanks to low oil prices, ample supply and stable demand. But shipping's overall growth was dragged down by the limited growth of dry bulk commodity trade, in particular coal and iron ore, and by the poor performance of container shipping, which carries about 95% of the world's manufactured goods.
Despite this slow growth, the industry's carrying capacity continued to grow, jumping 3.5% to 1.8 billion deadweight tons in 2015 and pushing freight rates down to record lows. In September 2016, the container market suffered its worst ever bankruptcy with the loss of Hanjin Shipping, the sector's seventh biggest carrier.
Unctad noted that the push for ever larger ships is at the root of the industry's problems, there's just not enough cargo right now to fill the newly acquired, bigger vessels. Falling demand from the People’s Republic of China (China), low commodity prices, over supply of ships and geopolitical uncertainties in some oil and gas producing countries all add to the current downside risks affecting shipping.
Shipping companies have sought to reduce their operating costs by building and buying ever larger ships. But this may prove costly for developing countries, where transport costs are already higher than in other regions. With larger ships, total system costs go up, and smaller trading nations are increasingly confronted with oligopolistic liner markets.
Developing countries account for ever larger shares of international shipping. By volume, they accounted for 60% of the goods loaded onto ships in 2015, and their share of goods unloaded was 62%, up from 41% in 2006.
With the exception of a few Asian countries such as China, most developing country ports lack the infrastructure for bigger ships. So, unless they spend heavily on upgrading their ports, developing countries face fewer port calls, less competitive markets and higher shipping costs.
But due to population growth, and the potential maritime trade and business opportunities that may be generated by new transport infrastructure projects such as the extension of the Panama Canal and Suez Canal, the long-term prospects for shipping remain positive, the report says. It urges developing countries to identify possible comparative advantages in sectors such as shipbuilding, registration and staffing, and to benefit from them. Unctad noted that developing countries could also cut their costs by keeping their ports competitive.
Shipping accounts for almost 3% of greenhouse gas emissions today, but as the industry grows its emissions could jump by 50 to 250% by 2050. Despite this, it remains one of the few sectors not regulated under the United Nations Framework Convention on Climate Change. But with the Paris Agreement on climate change coming into force on 04 November 2016, and this month's twenty-second Conference of the Party (COP) - COP 22 - meeting, shipping will be increasingly in the spotlight.