Seaborne trade expanded by a healthy 4 per cent in 2017, the fastest growth in five years, while UNCTAD forecasts similar growth this year, according to its Review of Maritime Transport 2018. Volumes across all segments are set to grow in 2018, with containerised and dry bulk commodities expected to record the fastest growth at the expense of tanker volumes.
The 2018 edition of the UNCTAD Review of Maritime Transport, marking its 50th year of publication, was launched earlier this month at the Global Maritime Forum’s Annual Summit that took place in Hong Kong.
However, Mr Mukhisa Kituyi, Secretary-General of UNCTAD, cautioned that while the prospects for seaborne trade are positive, these are threatened by the outbreak of trade wars and increased inward-looking policies. Escalating protectionism and tit-for-tat tariff battles will potentially disrupt the global trading system which underpins demand for maritime transport, he stressed.
The warning comes against a background of an improved balance between demand and supply that has lifted shipping rates to boost earnings and profits. Freight rate levels improved significantly in 2017 (except in the tanker market), supported by stronger global demand, more manageable fleet capacity growth and overall healthier market conditions, highlighted a release.
Supply-demand improvements, namely in the container and dry bulk shipping segments, are expected to continue in 2018. Freight rates may benefit accordingly, although supply-side capacity management and deployment remain key. UNCTAD projects an average annual growth rate in total volumes of 3.8 per cent up to 2023.
On the supply side, after five years of decelerating growth, 2017 saw a small pick-up in world fleet expansion. During the year, a total of 42 million gross tons were added to global tonnage, equivalent to a modest 3.3 per cent growth rate.
Looking at the shipping value chain, Germany remained the largest containership-owning country with a market share of 20 per cent at the beginning of 2018, although it lost some ground in 2017. In contrast, owners from Greece, China and Canada expanded their containership-owning market shares.
Meanwhile, in 2018, the Marshall Islands emerged as the second largest registry, after Panama and ahead of Liberia. More than 90 per cent of shipbuilding activity in 2017 occurred in China, the Republic of Korea and Japan, while 79 per cent of ship demolitions took place in South Asia, notably India, Bangladesh and Pakistan.
Key drivers of change
Liner shipping consolidation, technological advances, and climate change policy are key drivers of change in global shipping, the report says.
Consolidation activity in liner shipping continued unabated: the liner shipping industry witnessed further consolidation through mergers and acquisitions and global alliance restructuring.
As of January 2018, the Top 15 shipping lines accounted for 70.3 per cent of all capacity. Their share has increased further with the completion of the operational integration of the new mergers in 2018, with the Top 10 shipping lines controlling almost 70 per cent of fleet capacity as of June 2018.
Three global liner shipping alliances dominate capacity deployed on the three major East-West container routes, collectively accounting for 93 per cent of deployed capacity. Alliance members continue to compete on price while operational efficiency and capacity utilisation gains are helping to maintain low freight rate levels. By joining forces and forming alliances, carriers have strengthened their bargaining power vis-à-vis the seaports when negotiating port calls and terminal operations.
Growing consolidation can reinforce market power, potentially leading to decreased supply and service quality, and higher prices. Some of these negative outcomes may already be in effect. For example, in 2017–2018, the number of operators decreased in several small island developing states and structurally weak developing countries, as per the report.
“There is a need to assess the implications of mergers and alliances and of vertical integration within the industry, and to address any potential negative effects. This will require the commitment of all relevant parties, notably national competition authorities, container lines, shippers and ports,” Ms Shamika N. Sirimanne, Director of UNCTAD’s Division on Technology and Logistics, said.
Source : eximin