Global Maritime Trade in 2024: Old Problems, New Challenges, Unknown Perspectives

By Marek Grzybowski

Global maritime trade grew by 2.4% in 2023, recovering from a decline in 2022, but the recovery does not bode well and the foundations are fragile. The experts who prepared the Review of Maritime Transport 2024 identified the difficulties associated with the passage through the Suez and Panama Canals as key risk areas, as well as the current and unforeseen impacts caused by geopolitical tensions, conflicts and climate change.

Economies are increasingly vulnerable to supply chain disruptions. Small island developing states and least developed countries are particularly vulnerable to disruptions in maritime transport systems. These countries are the ones most affected by the rising costs of maritime transport due to vessels being redirected to the most profitable routes.

“These disruptions are lengthening shipping lanes, straining supply chains and raising costs, with profound implications for food security, energy supplies and the global economy, as more than 80% of world trade volume is carried by sea,” said UNCTAD’s Review of Maritime Transport 2024.

A review of the performance of maritime transport in recent years identifies these challenges and suggests urgent action to strengthen the resilience of the industry, accelerate decarbonisation and support vulnerable economies.

The need for sustainable and resilient maritime transport

In 2023, the supply of cargo in global seaborne trade increased by 2.4% to 12.3 billion tonnes. Last year, maritime transport worked hard to recover from the recession in 2022. UNCAD predicts that the supply of cargo by sea will increase by 2% in 2024, with annual increases reaching an average of 2.4% per year thereafter until 2029.

“Building sustainable and resilient maritime transport and securing global supply chains for the future is not just an option – it is a strategic necessity,” says Rebecca Grynspan, Secretary-General of UNCTAD.

The need for new infrastructure that is sustainable and resilient to disruptions and attacks is highlighted. There are also calls for a faster transition to low-emission shipping and a crackdown on ship registry fraud to protect global trade from unfair competition.

A threat to economies dependent on sea-based supplies in the coming years is rising freight costs and an “exceptionally daunting operating landscape” fuelled by geopolitical conflicts and climate risks. They will also make it harder for shipping to recover.

 

Source: PortEconomics, 2024

Bulk cargo will continue to drive the market. “Demand for iron ore, coal and grains remains strong, while container trade – up just 0.3% in 2023 – is expected to rebound by 3.5% in 2024, depending on supply chain stabilization,” UNCTAD analysts assumed.

Today we know that in the first half of 2024, a group of the largest European container ports handled almost 32 million TEU, which is about 5.4% more than in the first half of 2023. Most European ports recorded an increase in container handling, which was related to the increase in industrial and consumer goods from Asia.

Growth and decline across the Atlantic

A much more diverse situation occurred in the countries of North and Latin America. PortEconomics members Ricardo J. Sánchez and Eliana P. Barleta emphasize that after the Covid-19 pandemic, “as markets reopened and economies recovered, 2021 saw an increase in cargo supply in all regions. However, global maritime activity slowed down after the outbreak of the conflict between Russia and Ukraine, combined with the strict lockdown measures implemented by China as part of its “zero COVID” policy.

Therefore, in 2023, America has not yet fully recovered its pre-pandemic maritime trade levels. In 2023, only two countries in Latin America and the Caribbean showed growth when comparing port activity in H1 2023 and the corresponding period in 2022. In North America, only three ports recorded growth during the same periods. “The rest of the continent struggled with declines, in many cases at double-digit rates,” Sánchez and Barleta note.

The situation is showing signs of reversal, the researchers report, citing the WTO Barometer, released in May 2024. It shows that ports have begun to record increases in the supply of containers in both imports and exports. There have been positive developments that correlate with forecasts regarding the long-term trend in world trade. At the same time, ports in the sample of the region’s main ports are showing solid growth. This sample represents more than 85% of all container turnover in the countries and territories of the Caribbean, North, Central and South America, Sánchez and Barleta note. In 2024, compared to last year, only a few ports are showing a decrease in activity. Halifax, Montreal, Buenos Aires, Valparaiso, and Baltimore stand out. In the case of the latter, the sharp decline in turnover was due to the collapse of a bridge that cut it off from shipping lines. Of the remaining 27 ports, Sánchez and Barleta say 17 are showing double-digit growth, led by the port of San Antonio in Chile, which saw a 22% year-on-year increase.

 

PortEconomics found that, compared to pre-pandemic data, 8 of 32 ports have not yet reached activity levels seen in January through July 2019. Sixteen ports in the Americas were seeing double-digit growth rates in 2024. In their report, Sánchez and Barleta said it was too early to be optimistic, as activity peaked in June 2024 and has been declining for the next two months, which could also affect U.S. ports in the future.

Ton-miles up 4.2%

The record number of almost 250,000 container ship calls in the second half of 2023 was the result of rising demand from industry and trade, which was rebuilding inventories and preparing for the second half of 2024. UNCTAD also attributed this to longer routes, which has caused some bottlenecks, especially in Asia, which handles 63% of global container trade.

Extended shipping routes for bulk, liquid and general cargo have had an impact on ship performance. Tonne-miles increased by 4.2% due to longer logistics connections. Reduced capacity of the Panama Canal and restricted use of the Suez Canal are clearly putting pressure on supply chains and increasing greenhouse gas emissions from maritime transport. This is despite the fact that half of tankers already have scrubbers. We wrote about it here.

The number of ships smuggling grain, oil and other strategic raw materials is growing. We wrote about it here. Maritime transport has been disrupted by unfair competition. The number of ships over 20 years old (mainly tankers) and fake registrations, ships that threaten the safety of navigation, is growing. Ongoing efforts by the International Maritime Organization (IMO) to combat fake ship registrations underscore the urgent need to address this problem, UNCTAD urges.

Lars Barstad of Frontline told Lloyds List that he had “lost all faith” in the ability of sanctions and regulation to curb the dark fleet. The ageing of the tanker and bulker fleet is accelerating, with more and more old tankers in particular moving into the “grey zone.”

Tankers over 20 years old that used to be scrapped are now hauling cargoes for Iran, Venezuela and Russia. “But there is a limit to the size of the dark fleet because it faces the same fundamentals of supply and demand. “That upper limit will be reached ‘soon,’” Frontline CEO Lars Barstad predicted on a conference call, reports Greg Miller of Lloyds List.

“What we have ended up seeing is a two-tiered market developing before our eyes,” Barstad said, noting that “the divide between what we call the compliant and non-compliant markets has widened over the last 12 to 18 months. Currently, and to some this is quite surprising, 23% of the world’s tanker fleet is suspected of being involved in sanctioned transactions.”

That is why the demand for deglobalization, shortening the supply chain and developing short-sea shipping is still relevant. There is still a demand for ecological and disruption-resistant supply chains focused on supporting regional trade. And most importantly. The elimination of conflicts and flashpoints in important places on our globe will lead to shortening and stabilizing supply chains. And this will be beneficial to all parties, global and local participants in international trade.