Seven Key Trends Shaping Maritime Transport
Seaborne trade expanded by four percent in 2017, the fastest growth in five years, and UNCTAD forecasts similar growth this year, according to its Review of Maritime Transport 2018. Volumes across all segments are set to grow in 2018, with containerized and dry bulk commodities expected to record the fastest growth at the expense of tanker volumes. UNCTAD projects an average annual growth rate in total volumes of 3.8 percent up to 2023.
After five years of decelerating growth, 2017 saw a small pick-up in world fleet expansion. During the year, a total of 42 million gross tons were added to global tonnage, equivalent to a 3.3 percent growth rate.
UNCTAD’s Review of Maritime Transport 2018 identifies seven key trends that are currently redefining the maritime transport landscape and shaping the sector’s outlook:
1) Protectionism
On the demand side, the uncertainty arising from wide-ranging geopolitical, economic and trade policy risks as well as some structural shifts, constitutes a drag on maritime trade. An immediate concern are the inward-looking policies and rising protectionist sentiment that could undermine global economic growth, restrict flows and shift trade patterns.
2) Digitalization, e-commerce and the implementation of the Belt and Road Initiative
The unfolding effects of technological advances and China’s ambitious reordering of global trade infrastructure will entail important implications for shipping and maritime trade. The Belt and Road Initiative and growing e-commerce have the potential to boost seaborne trade volumes, while the digitalization of maritime transport will help the industry respond to the increased demand with enhanced efficiency.
3) Excessive new capacity
From the supply-side perspective, overly optimistic carriers competing for market share may order excessive new capacity, leading to worsened shipping market conditions. This, in turn, will upset the supply and demand balance and have repercussions on freight-rate levels and volatility, transport costs as well as earnings.
4) Consolidation
Liner shipping consolidation through mergers and alliances has been on the rise over recent years in response to lower demand levels and oversupplied shipping capacity dominated by mega container vessels. The way this affects competition, and the potential for market power abuse by large shipping lines as well as the related impact on smaller players, remains a concern.
5) The relationship between ports and container shipping lines
Alliance restructuring, and larger vessel deployment is also redefining the relationship between ports and container shipping lines. Competition authorities and maritime transport regulators should also analyze the impact of market concentration and alliance deployment on the relationship between ports and carriers. Areas of interest span the selection of ports-of-call, the configuration of liner shipping networks, the distribution of costs and benefits between container shipping and ports, and approaches to container terminal concessions.
6) Scale
The value of shipping can no longer be determined by scale alone. The ability of the sector to leverage relevant technological advances is as increasingly important.
7) Climate change
Efforts to curb the carbon footprint and improve the environmental performance of international shipping remain high on the international agenda. The initial strategy adopted in April 2018 by the IMO to reduce annual greenhouse gas emissions from ships by at least 50 percent by 2050, compared to 2008, is a particularly important development. On the issue of air pollution, the global limit of 0.5 percent on sulfur in fuel oil will come into effect on January 1, 2020. To ensure consistent implementation of the global cap on sulfur, it will be important for shipowners and operators to continue to consider and adopt various strategies, including installing scrubbers and switching to liquefied natural gas and other low-sulfur fuels.