The UN Conference on Trade and Development – UNCTAD – released the Review of Maritime Transport 2019 report, in which it presented the current trends in the development of maritime transport and trade. Since the report is global in nature, data collection was carried out for a long period of time.
According to the report, in 2019-2024 the average growth of world trade is expected at the level of 3.4% annually. The analysis of the development of sea freight traffic presented in the report concerns the period up to the beginning of 2019 and therefore does not take into account the coronavirus epidemic as an unforeseen factor that could significantly adjust the forecast of UNCTAD analysts.
Nevertheless, it is worth noting more predictable factors that will continue to influence the development of world trade:
– environmental problems and fuel economy;
– the trade war between the United States and China;
– geopolitics, in particular, the issue of control over the Strait of Hormuz;
– changes in models of globalization.
Another phenomenon that is changing the conjuncture of the global cargo transportation market is that large shipping companies like MAERSK and COSCO Shipping intend to expand their presence not only at sea, but also on land. For example, MAERSK, which accounts for 80% of its traffic in containers, intends to achieve a 50/50 indicator for sea and land services.
What goods are transported most often?
Maritime transport remains the backbone of globalized trade and the manufacturing supply chain, as more than four fifths of world merchandise trade by volume is carried by sea.
However, growth in international maritime trade fell slightly in 2018, owing to softer economic indicators amid heightened uncertainty and
the build-up of wide-ranging downside risks.
This decline reflects developments in the world economy and trade activity. Volumes increased at 2.7 per cent, below the historical average of 3.0 per cent from 1970–2017 and 4.1 per cent in 2017.
Nonetheless, total volumes reached a milestone in 2018, when they achieved an alltime high of 11 billion tons – the first time on UNCTAD record. Dry bulk commodities, followed by containerized cargo, other dry bulk, oil, gas and chemicals, contributed the most to this growth.
In 2018, major dry bulk commodities – iron ore, grain and coal – accounted for more than 40.0 per cent of total dry cargo shipments, while containerized trade and minor bulks accounted for 24.0 per cent and 25.8 per cent, respectively. Remaining volumes were made of other dry cargo, including break bulks.
The volumes of transported coal in 2018 amounted to 1,236 million tons, grain – 471 million tons, steel – 390 million tons, timber – 378 million tons. environmental standards of some importing countries. Thus, in the EU, coal imports fell by 5.8%.
However, the decline in the European market was offset by an increase in coal imports to China, which imported 19% of this mineral in 2018. Australia and Indonesia became the leaders in the export of coal.
With regard to grain exports, among the important changes that have taken place in this market, there is a 10% increase in supplies from Brazil by 10% and a decrease of 1.4% from the United States. As for Ukraine, our state took 4th place in the ranking of the largest grain exporters.
Tanker trade shipments (oil, gas and chemicals), accounted for 29.0 per cent of total maritime trade volume, down from 55 per cent nearly five decades earlier.
At the same time, the export of oil products by tankers in recent years has slightly shifted from Western Asia to the Atlantic countries such as Angola, Brazil, Canada, Nigeria and the USA.
Summing up, it is safe to say that the transportation of the main bulk cargo continues to displace tanker transportation in percentage terms.
Why are the volumes of tanker shipments decreasing?
This is consistent with the ongoing shift in the maritime trade structure that is largely rooted in the 1980s. The decade saw a decrease in tanker trade of 6.2 per cent, reflecting the constrained petroleum consumption in main consumer countries that followed the oil shocks of the 1970s.
Over the same period, major bulks, including iron ore, grain and coal, increased by more than half. Containerized cargo expanded at the fastest rate, with volumes rising at an annual average rate of 8.0 per cent between 1980 and 2018. In 2018, the total volume of container traffic, as indicated in the report, amounted to 152 million TEU.
The compositional shift in world maritime trade was further emphasized by the development of pipeline trade and the rise of manufactures trade, propelled by fragmentated global production processes and international division of labour since the mid-1990s.
Which countries are most actively involved in the world’s sea freight?
UNCTAD pays particular attention to developing countries’ participation in world trade, consistently checking where the cargo is loaded and unloaded, that is, who generates the trade and where it goes.
Developing countries have been the main exporting countries, with nearly two thirds of maritime trade originating in their territories. The 1980s showed a decline in this trend, reflecting oil trade developments that followed the oil shocks of the 1970s. Developing countries did not figure prominently in view of the colonial trade patterns whereby as marginal players, they exported raw materials and imported mainly consumer goods.
In 2018, developing countries continued to account for most global maritime trade flows, both in terms of exports (goods loaded) and imports (goods unloaded).
These countries loaded an estimated 58.8 per cent in 2018 and unloaded 64.5 per cent of this total. Since 2000, the contribution of developing countries to maritime trade has shifted, reflecting their growing role as major exporters of raw materials, as well as major exporters and importers of finished and semi-finished goods. Participation in containerized trade, however, has been concentrated in Asia, notably in China and neighbouring countries.
Other developing regions did not contribute equally, a reflection of their varying degrees of integration into global value chains and manufacturing networks.
By contrast, developed countries saw their share of both types of traffic decline over time, hovering at around one third in terms of goods loaded and unloaded, respectively.
The share of transition economies remained relatively smaller. A total of 6.5 per cent of world maritime trade volumes were loaded in these economies’ ports and less than 1.0 per cent was unloaded in their territory.
In 2018, 41 per cent of the total goods loaded in 2018 originated in Asia and 61 per cent of total goods unloaded were received in this same region. Over the years, the participation of Africa declined, particularly in terms of goods loaded, reflecting the reduced importance of traditional African exporters of liquid and dry bulk cargoes.
This was only partly compensated for by alternative raw material sources from Africa, not by Africa becoming more active in exporting goods with more value added and goods that are generally carried in containers, including manufactured goods and processed food or industrial products.
The relative decline of Latin American countries as a source of trade volumes is equally notable.
In contrast, Asian countries have experienced a large increase in intraregional trade mostly based on manufactures trades and reflecting fragmented production processes. Parts are generally manufactured in multiple locations across Asia and assembled in another location.
This was not observed in Africa and only to a limited extent in Latin America, due to in part to the similarities in factor endowments in the region and to limitations in infrastructure and shipping services.
Intra- and inter-port competition
Intra-port competition stems from the diversity of actors involved in the administration of different terminals and services within a port. This is a consequence of the increased use of concessions for the management of terminals and port services.
Technology underpinning productivity (i.e. reduced times for loading and unloading) and fees associated with services are important differentiating factors at the intra-port level.
The use of specialized terminals by type of cargo is increasingly being used to raise operational efficiency in the handling of cargo. For example, in the port of San Antonio, Chile, each terminal handles a different type of cargo.
Compared with intra-port competition, inter-port competition is affected by other variables besides technology, namely conditions of access to transport networks, and economic and regulatory issues.
Terminal operators are also engaging in consolidation, motivated by the interest of ports to attract shipping companies as ports of call; increase port throughput, efficiency and economies of scale; and diversify business opportunities.
Between 2018 and 2019, several alliances and joint ventures were established between terminal operators to allow the joint operation of berths and between liner companies and terminal operators.
In Hong Kong, China, four terminal operators joined forces to operate 23 berths. Further, the authorities of Taiwan Province of China have announced the formation of joint ventures between port and terminal operators in that province to run several terminals in Kaohsiung.
In December 2018, pan-Japanese liner group ONE and the Port of Singapore Authority launched a joint venture to operate four berths at Pasir Panjang Terminal, Singapore.
Instances of mergers and joint ventures between ports in China (regional hubs merging with smaller ports and between ports and terminals) have also been reported, resulting in the emergence of larger port groups (International Association of Ports and Harbours, 2019).
Terminal operators are also pursuing vertical integration – integrating logistic networks to expand activities beyond the port gate to diversify sources of revenue – and are competing with liner shipping companies with the same aim.
This is illustrated by the acquisition in 2018 by DP World of Unifeeder, a Danish logistics company that operates a container feeder and shortsea network in Europe.
In an increasingly competitive environment, both at the intra-port and intra-port levels, the port sector is witnessing increased consolidation, alliances and vertical integration in connection with logistic activities.