Statement by Mukhisa Kituyi, Secretary-General of UNCTAD

Launch of the Review of Maritime Transport 2020

Virtual event
12 November 2020

At the outset of the pandemic, I put out a call to keep ships moving, ports open and cross-border trade flowing. In this call for action, I highlighted the importance of ports and shipping for the effective response to the COVID-19 pandemic. We take up this issue in our newets flagship publication Review of Maritime Transport 2020, where we analyse how shipping is affected by the crisis, and how it must play a key role overcoming the crisis. The crisis hits at a pivotal moment for the sector, which is facing shifts in globalization patterns and supply-chain design, changes in consumption and spending habits, a growing focus on risk assessment and resilience-building, and a heightened sustainability and low-carbon agenda.

The pandemic has upended the landscape for maritime transport and trade, significantly affecting growth prospects. UNCTAD projects the volume of international maritime trade to fall by 4.1 per cent in 2020. These trends are unfolding against the backdrop of an already weaker 2019 that saw international maritime trade lose further momentum. Lingering trade tensions and high policy uncertainty undermined growth in global economic output and merchandise trade. Volumes expanded by 0.5 per cent in 2019, down from 2.8 per cent in 2018, and reached 11.08 billion tons in 2019. In tandem, global container port traffic decelerated to 2 per cent growth, down from 4 per cent in 2018.

Beyond these headline figures, this year’s RMT draws several lessons from the pandemic and how it has affected longer term trends underway in the shipping and maritime trade industry:

First, seafarers are essential and critical workers! Due to restrictions relating to the outbreak of COVID-19, large numbers of seafarers had their service extended on board ships after many months at sea, unable to be replaced or repatriated after long tours of duty. This is unsustainable, both for the safety and well-being of seafarers and the safe operation of ships. Others who had been on break could not return to work, with dire implications for their personal income. Together with the Secretary General of the IMO, I have issued a call to designate seafarers and other marine personnel, regardless of nationality, as key workers, and exempt them from travel restrictions, to ensure that crew changes can be carried out.

Secondly, gains from the economies of scale resulting from the broader industry trend towards larger vessels are not necessarily benefitting ports and inland transport service providers, as they often increase total transport costs across the logistics chain. The concentration of cargo in bigger ships and fewer ports often implies business for a smaller number of companies. The cost savings made on the seaside are not always passed on to clients in the form of lower freight rates. This is more evident in markets such as small island developing States, where only few service providers are in operation. These additional costs will have to be borne by shippers, ports and inland transport providers.

Third, more stringent environmental requirements are continuing to shape the maritime transport sector. Greenhouse gas emissions from international shipping continue to rank high on the international policy agenda and UNCTAD is collaborating very closely with the IMO in helping the industry “get to zero”. But there are equity concerns that must be addressed. For example, SIDS are among the most affected by climate change – and least connected – but they are among the most costly to decarbonize. It will be crucial to provide the necessary technical and financial support to these countries so that they can adapt to climate change, and mitigate impact of new regulations that affect maritime transport costs and connectivity.

We have seen some success stories among small island developing States overcoming their maritime connectivity challenges. They can attract trans-shipment services and use the additional fleet deployed to service national trade, as illustrated by the Bahamas, Jamaica and Mauritius. By serving as hub ports handling other countries’ trade, these island countries have increased their own liner-shipping connectivity levels, which in turn benefits their respective importers and exporters.

With regard to the protection of the marine environment and the conservation and sustainable use of marine biodiversity, there are several areas where regulatory action has recently been taken or is under way. These include ballast-water management, measures to address biofouling, the reduction of pollution from plastics and microplastics, safety considerations of new fuel blends and alternative marine fuels, and the conservation and sustainable use of marine biodiversity of areas beyond national jurisdiction.

The fourth important point raised in this year’s RMT is how due to the COVID-19 pandemic, ports have enhanced their work on digitalization. Stakeholders who in the past may have been reluctant to embrace digital documents and electronic payments now realize that physical contact and paper documents need to be replaced by digital solutions as much as possible.

I am pleased to see that many of our UNCTAD programmes have shown to be particularly useful in helping advancing reforms, and thus also help build resilience in global supply chains. Our programmes in support of transport and trade facilitation, such as ASYCUDA, port management, trade information portals, Single Windows, e-commerce assessments, transit cargo tracking, and in general digitalization and dematerialization are in high demand.

If there is one overriding lesson we have learned from the effects of the pandemic on maritime trade, it is that there is no “trade-off” between facilitating maritime trade and transport on the one hand, and the protection of the health of port workers and population on the other. The contrary is true: Practically all the concrete solutions that we are proposing – from electronic documents, over risk management, to automation – in practice achieve both: They make shipping easier, and they reduce the risks for ports and the society.