Indications have emerged that global maritime trade is on a downward trend.
The Review of Maritime Transport 2019, released weekend, by the United Nations Conference on Trade and Development (UNCTAD) shows a dip in maritime trade growth. Trade policy crosscurrents, geopolitics and sanctions, environmental concerns, fuel economics and tensions involving the Strait of Hormuz – a strategic maritime chokepoint – all contributed to decelerated growth in merchandise trade.
World maritime trade lost momentum in 2018 as heightened uncertainty, escalating tariff tensions between the US and China and mounting concerns over other trade policy and political crosscurrents, notably a no-deal Brexit, sent waves through global markets, according to the UN Conference on Trade and Development’s (UNCTAD) Review of Maritime Transport 2019.
Volumes in the sector grew by only 2.7 percent last year, below the historical averages of three percent and 4.1 percent recorded in 2017, according to the report.
“The dip in maritime trade growth is a result of several trends including a weakening multilateral trading system and growing protectionism,” said Mukhisa Kituyi, UNCTAD secretary-general.
“It is a warning that national policies can have a negative impact on the maritime trade and development aspirations of all,” he added.
Buffeted by a global economic slowdown, in 2018, seaborne trade also navigated other difficult headwinds such as geopolitical tensions, while preparing for an expected surge in ship fuel costs arising from a new regulation requiring ships to cut their sulphur dioxide emissions.
UNCTAD expects international maritime trade to expand at an average annual growth rate of 3.4 percent over the 2019–2024 period, driven in particular by growth in containerized, dry bulk and gas cargoes. However, uncertainty remains an overriding theme in the current maritime transport environment, with risks tilted to the downside.
Reflecting slower maritime trade, growth in global port traffic also edged down, with container port traffic increasing by only 4.7 percent in 2018, from a 6.7 percent growth rate in 2017.
Despite the setbacks, a milestone was reached, with total seaborne trade volumes amounting to 11 billion tons.
The maritime transport industry also saw a silver lining in an expanding liquefied natural gas (LNG) sector. This came as a result of intensified pressure to promote cleaner energy sources. Bulk carriers, oil tankers and container ships recorded the highest level of ship deliveries, with LNG carriers recording the highest growth rate at 7.25 percent.
The report warns that while global growth could swing in a positive direction, given some upside factors such as China’s Belt and Road Initiative, and the various trade deals that came into force or are in the pipeline, the balance of risks to the outlook remains poor.
The risks are particularly high for the most vulnerable economies. The report highlights a growing connectivity divide – an increasing difference between the most- and least-connected countries.
Several small islands developing states are among the countries with the lowest shipping connectivity, as they are often confronted with a vicious cycle wherein low trade volumes discourage investments in better maritime transport connectivity, and faced with low connectivity, merchandize trade becomes costly and uncompetitive.