World seaborne trade continued to expand in 1998, breaking the 5 billion tons mark for the first time. But its annual growth rate fell by half, to 2.2 per cent, in 1998, the lowest rate since 1987, and is not expected to exceed that level in 1999, UNCTAD announced today in its Review of Maritime Transport, 1999 (1).
This slower growth in seaborne trade reflects the decline of world merchandise trade (3.5 per cent in 1998 compared to 10.5 per cent in 1997) in the aftermath of the Asian crisis.
The estimated growth of tanker shipments in 1999 is put by UNCTAD at 1.9 per cent. However, growth in the transport of dry cargo is expected to slow to 2.3 per cent overall, even though the volume of main dry bulk commodities will probably grow at a similar rate to that in 1998.
This annual publication from UNCTAD provides trends in seaborne trade and analyses the performance of maritime trade and shipping in different regions with a special focus on problems faced by developing countries. The 1999 Review looks in particular at recent trade and transport developments in Latin America.
In 1998, world dry cargo shipments grew by 3.7 per cent while tanker shipments increased marginally by 0.4 per cent. However, the volume of dry bulk trades in iron ore and grain declined by 2.3 per cent and 6.4 per cent respectively. Coal was again the most important commodity traded, with a volume increase of 2.6 per cent.
Total liner shipments of containerized cargoes in 1998, worldwide, registered an increase of only 1.8 per cent, after having grown by 8.5 per cent in 1997. The share of developing countries in total world cargo loaded remained virtually unchanged, at 51 per cent. As in the past, their share reflects the heavy preponderance of crude oil shipments (84.1 per cent of world total), over dry cargo (31.2 per cent of world total).
Notwithstanding a sustained high level of imports of dry cargo (30.2 per cent) including manufactured goods, developing countries’ share of total cargo unloaded decreased slightly to 27.6 per cent. The share of Asian developing countries in goods loaded and unloaded went down marginally, to 26.2 per cent and 18.6 per cent, respectively.
Productivity hits record
The world merchant fleet in 1998 increased by 1.6 per cent over 1997 to 788.7 million deadweight tons (dwt). As the increase in tonnage was lower than the growth of seaborne trade, operational productivity indicators for the world fleet remained favourable, with tons of cargo carried per dwt reaching a record of 6.42.
Analysis of the regional structure of the world fleet shows a slight decrease (0.2 per cent) in the share owned by developing countries, to 19.1 per cent, in 1998.
Significant regional imbalances persist within the developing world. Tanker and containership tonnages are concentrated in Asian developing countries, which own over 75 per cent of tanker and containership tonnage in the hands of developing countries. By contrast, African developing countries own less than 5 per cent.
Focus on Latin America
The Review points to the need to expand shipping services and modernize the merchant fleets in Latin America. High transportation costs remain barriers to trade competitiveness, in particular for small-island developing countries in the Caribbean and landlocked countries in South America
Promising opportunities in shipping
Notwithstanding the opening up of their economies, and promising prospects for foreign investors, Latin American companies remain largely absent from the world’s shipping sector. The region owns only 4.4 per cent of the world fleet in deadweight terms.
It nevertheless offers good opportunities for those looking to establish or expand shipping connections with the region. In the liner sector in particular, the region has been endeavouring to improve its ability to cope with the needs of containerized traffic. UNCTAD anticipates that shipping companies will integrate their North/South operations, and decide which ports in South America will act as "hub ports" to effectively connect "the East-West" or "round-the-world" services to North/South transport.
Containership fleets in foreign hands
Central America, the Caribbean and Mexico have been increasing their share of world containerships. The percentage grew from 0.6 per cent in 1990 to 3.4 per cent in 1998. However, this statistical increase was largely accounted for by a sharp jump in registrations in "open-registry" countries, such as Antigua and Barbuda, and St.Vincent and the Grenadines. The two latter countries alone accounted for nearly 95 per cent of the containership tonnage increase observed in 1998.
By contrast, containership tonnage owned by major Latin American trading nations remains very low.
Aged merchant fleet
Latin American fleets are the oldest in the world. Some 70 per cent of their vessels are at least 15 years old. The comparable figure for the world as a whole is around 50 per cent. The situation is particularly bad in many of Latin America’s leading economies, i.e. Argentina, Chile, Colombia, Mexico, Peru and Venezuela In each of the five vessel types (oil tankers, dry bulk carriers, general cargo ships, containerships and others), the majority of the total tonnage is at least 20 years old.
The one major trading nation in Latin America which has gone against the regional trend, and has been lowering the average age of its shipping fleets, has been Brazil. This has helped improve the overall age of the Latin American fleets.
Freight costs in Latin American countries have been improving but benefits have been unevenly distributed
In one area, however, Latin American countries score better than their counterparts in other developing country regions. This is in keeping down freight costs as a percentage of total import value.
In 1997, the latest year for which complete statistics are available, freight costs declined to 7.02 per cent, compared with 8.17 per cent at the start of the decade. However, there are sharp cost variations within the region.
In 1997, the freight factor for the Caribbean countries was 11.10 per cent, the highest in this region, followed by South America’s northern seaboard (French Guyana, Guyana, Netherlands Antilles, Suriname, Venezuela) with 10.26 per cent and the western seaboard (Chile, Colombia, Ecuador) with 7.20 per cent.
Freight costs of Central America amounted to 5.54 per cent, the lowest among American developing countries and very close to the world average of 5.24 per cent. The freight factors of Mexico, Brazil and Argentina were relatively low, at 4.42 per cent, 6.36 per cent and 6.53 per cent respectively.
Predictably, the freight factors of the landlocked countries, Bolivia and Paraguay (at 11.10 per cent and 11.33 per cent, respectively), were very high. Among the Caribbean island countries, the Dominican Republic, Haiti and Jamaica faced the highest charges of between 12 and 13 per cent of import value.
These variations can be explained by geographical factors as well as by differences in trade and shipping systems and patterns. The development of ports and other maritime infrastructures, particularly in the liner sector, also impact overall freight costs.