Driven by rising domestic demand in China and by increased intra-Asian and South-South trade, international seaborne trade performed relatively well in 2012, with volumes increasing by 4.3 per cent, reaching 9.2 billion tons for the first time ever, UNCTAD's Review of Maritime Transport 2013 (RMT) reports.
World container port throughput also increased by an estimated 3.8 per cent in 2012, to 601.8 million twenty-foot equivalent units (TEUs) in 2012. This growth was reflected in a strong port-finance sector as investors looked to infrastructure to provide long-term stable returns.
The 2012 increase in seaborne trade did not do much to boost the maritime shipping industry's profitability, however, despite the fact that last year, for the first time in over a decade, the number of ships entering into service declined from the total of the previous year. The largest cycle of ship building in history - the cargo capacity of the world fleet more than doubled between 2001 and January 2013 - finally began to slow, but even with fewer new ships, world tonnage capacity continued to climb in 2012, up by 6 per cent over January 2012. That meant the prevailing oversupply of shipping capacity continued through 2012, the RMT reports.
The steady delivery of new vessels into an already oversupplied market, coupled with the weak global economy, kept shipping rates under heavy pressure, the Review says. The low freight rates that prevailed in 2012 reduced carriers' earnings close to, and even below, operating costs, especially when bunker oil prices remained both high and volatile. Carriers applied various strategies to remedy the situation, in particular by taking steps to reduce fuel consumption.
Among other challenges facing the industry are energy security and costs, and related issues of climate change and environmental sustainability.
But the RMT also stresses that new opportunities are emerging in connection with a number of trends. These include growing regional seaborne trade and South-South cooperation, structural change in the world energy map and consequent ripple effects on tanker trade as well as the anticipated expansion/opening of new sea routes through the arctic and through the widened Panama Canal. The improved canal is expected to open in 2015.
Bigger ships and fewer services
A long-term trend towards larger cargo vessels continued in 2012 and 2013, the Review reports. Also continuing was a trend towards fewer liner companies serving each country.
Based on UNCTAD's Liner Shipping Connectivity Index (LSCI), which now has compiled data for 10 years, the average number of carriers per country has decreased by 27 per cent over the past decade, from 22 in 2004 to 16 in early 2013. This reduction in choice among shippers poses challenges, especially for smaller developing countries, which are confronted with potentially oligopolistic markets, the report says.
Legal issues and regulatory developments
Important legal developments covered in the Review include the entry into force of the 2006 Maritime Labour Convention (effective 20 August 2013), and of the 2002 Athens Convention relating to the Carriage of Passengers and their Luggage by Sea (effective 23 April 2014). Also significant are a range of regulatory measures to strengthen the legal framework relating to ship-source air pollution, port reception facilities, and garbage management.
The RMT says that to assist in the implementation of a set of technical and operational measures to increase energy efficiency and reduce greenhouse gas (GHG) emissions from international shipping (entry into force on 1 January 2013), additional guidelines and unified interpretations were adopted at International Maritime Organization (IMO) in October 2012 and May 2013.
Land-locked countries' access to seaports
A special chapter of the RMT13 looks at connecting landlocked countries to maritime shipping services. The passage of landlocked countries' trade through coastal territories to access shipping services is generally governed by a standard principle: goods in transit and their carriage are granted crossing free of fiscal duties and by the most convenient routes. In practice, however, the report says, the implementation of this basic norm suffers from numerous operational difficulties. These result in high transport costs and long travel times, which undermine trade competitiveness and ultimately the economic development of landlocked countries.
The Review explores a new strategy that should allow for a radical transformation of transit systems that would enable landlocked countries to have reliable access to global value chains, allowing them to expand beyond their role as providers of primary goods. The proposed concept builds upon a "trusted transit operator scheme" guaranteeing uninterrupted transit from sea port to hinterlands and vice versa. Such a reliability model solution could be made part of the priorities of the new agenda for landlocked and transit developing countries to be adopted in 2014 under the Almaty Programme of Action, the report notes.
Maritime transport is the backbone of international trade and the global economy. Around 80 per cent of global trade by volume and over 70 per cent of global trade by value are carried by sea and are handled by ports worldwide. These shares are even higher in the case of most developing countries.
UNCTAD's Review of Maritime Transport has since 1968 provided coverage of key developments affecting international seaborne trade, shipping, the world fleet, ports, freight markets, and transport-related regulatory and legal frameworks.
As in previous issues, the 2013 Review contains critical analyses and unique data, including long-term data series, on seaborne trade, fleet capacity, shipping services, and port-handling activities.