Maritime industry must invest in supply chain resilience – UNCTAD

The UN Conference on Trade and Development (UNCTAD) has called for increased investment in maritime supply chains, amid fears they are now reaching breaking point. has In its flagship “Review of Maritime Transport 2022” UNCTD said ports, shipping fleets and hinterland connections need to be better prepared for future global crises, climate change and the transition to low-carbon energy.

“The supply chain crisis of the last two years has shown that a mismatch between demand and supply of maritime logistics capacity leads to surges in freight rates, congestion, and critical interruptions to global value chains,” it warned

Ships carry over 80% of the goods traded globally, with the percentage even higher for most developing countries, said UNCTD, hence the urgent need to boost resilience to shocks that disrupt supply chains, fuel inflation and affect the poorest the most.

“We need to learn from the current supply chain crisis and prepare better for future challenges and transitions. This includes enhancing intermodal infrastructure, fleet renewal and improving port performance and trade facilitation,” UNCTAD secretary-general Rebeca Grynspan (pic) said. “And we must not delay the decarbonisation of shipping.”

“If there is one thing we have learned from the crisis of the last two years it is that ports and shipping greatly matter for a well-functioning global economy,” said Shamika N. Sirimanne, director of UNCTAD’s technology and logistics division. “Higher freight rates have led to surging consumer prices, especially for the most vulnerable. Interrupted supply chains led to lay-offs and food insecurity.”

In the report UNCTAD called on countries to carefully assess potential changes in shipping demand, develop and upgrade port infrastructure and hinterland connections while involving the private sector. They should also bolster port connectivity, expand storage and warehousing space and capabilities, minimize labour and equipment shortages.

“Many supply chain disruptions can also be eased through trade facilitation, notably through digitalisation, which cuts waiting and clearance times in ports and speeds up documentary processes through e-documents and electronic payments,” the review stated.

On a move to a sustainable future  the report said the maritime sector was currently heaidg in the wrong direction.

The report found that between 2020 and 2021 total carbon emissions from the world maritime fleet increased by 4.7%, with most of the increases coming from container ships, dry bulk and general cargo vessels.

The report also raised concern over the increasing average age of ships. By number of ships, the current average age is 21.9 years, and by carrying capacity 11.5 years. Ships are ageing partly due to uncertainty about future technological developments and the most cost-efficient fuels, as well as about changing regulations and carbon prices.

The review added investments in new ships that reduce greenhouse gas emissions will be hampered by surging borrowing costs, a darkened economic outlook and regulatory uncertainties.

As such, UNCTAD called for more investment in technical and operational improvements to cut the carbon footprint of maritime transport. These include switching to alternative, low or zero-carbon fuels, optimising operations, using on-shore electricity when in ports and equipping vessels with energy-efficient technology.

The report also renewed calls for a predictable global regulatory framework for investing in decarbonisation and increased support for developing countries in the energy transition.

“It further underlines the urgent need to adapt ports to the impacts of climate change, especially in the most vulnerable nations,” the review added.

“Rarely has the importance of maritime logistics for trade and development been more evident than during the last year,” Grynspan said. “Historically high and volatile freight rates, congestion, closed ports and new demands for shipping following COVID-19 and the war in Ukraine have all had measurable impacts on people’s lives.”

She added: “The war in Ukraine has disrupted major shipping routes and supply chains. It has also triggered record prices that could push tens of millions more people across the world into hunger and poverty this year, as has been stated by the UN Global Crisis Response Group. Maritime transport has a key role to play in cushioning the blow. Prices need to come down to affordable levels, especially for developing countries, and for the world to have enough fertilisers to feed itself.”

The report found that between 2020 and 2021 total carbon emissions from the world maritime fleet increased by 4.7%, with most of the increases coming from container ships, dry bulk and general cargo vessels.