Global maritime trade slumps amid weakening multilateral trading system and growing protectionism

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GLOBAL – The UN Conference on Trade and Development’s (UNCTAD) Review of Maritime Transport 2019, released in late October has revealed a dip in maritime trade growth.

The decelerated growth in merchandise trade was caused by a number of factors including Trade policy crosscurrents, geopolitics and sanctions, environmental concerns, fuel economics and tensions involving the Strait of Hormuz – a strategic maritime chokepoint.

The reported showed that 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 report, volumes in the sector grew by only 2.7% last year, below the historical averages of 3% and 4.1% recorded in 2017.

Similarly, container trade growth weakened with the 2018 volumes only increasing by 2.6%, compared with 6% in 2017.

The report further noted that a sustained delivery of mega container ships, with container fleet supply capacity in 2018 increasing by 6% as compared to 4% in 2017 played a role in further compressing freight rates in 2018.

“The dip in maritime trade growth is a result of several trends including a weakening multilateral trading system and growing protectionism,” said UNCTAD Secretary-General Mukhisa Kituyi.

“It is a warning that national policies can have a negative impact on the maritime trade and development aspirations of all,” he added.

The report also noted that maritime trade is also expected to face another challenge of rising ship fuel costs arising from a new regulation requiring ships to cut their sulphur dioxide emissions.

The report also notes that, profound structural trends that started more than a decade ago and have taken hold are slowly transforming the maritime transport landscape.

Shamika N. Sirimanne, director of UNCTAD’s division on technology and logistics noted that “Other factors that are structural and existential, such as technological disruptions and climate change are at play and are redefining the sector.”

According to the report, the sector is also increasingly facing intensified and more frequent natural disasters and climate-related disruptions.

This had made climate-risk assessment, adaptation and resilience building for seaports and other coastal transport infrastructure an increasingly urgent priority globally.

UNCTAD expects international maritime trade to expand at an average annual growth rate of 3.4% 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.

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