Global Trade and Supply Chains Face Major Risks

On the 22nd local time, the annual flagship report "Review of Maritime Transport 2024" (hereinafter referred to as the "Report") released by the United Nations Conference on Trade and Development (UNCTAD) showed that global maritime trade began to recover after the contraction in 2022, achieving a 2.4% increase in 2023, with a total volume reaching 12.292 billion tons.

The Report expects that maritime trade in 2024 will see a slight increase of 2%, driven by demand for bulk commodities such as iron ore, coal, and grain, as well as containerized cargo.

Against the backdrop of trade recovery, geopolitical tensions and climate change also pose challenges to the stability of global trade and supply chains.

The Report states that key maritime hubs such as the Panama Canal, the Red Sea, the Suez Canal and the Black Sea are under unprecedented pressure. If the aforementioned disruptions continue, global consumer prices could rise by 0.6% by 2025, with small island developing countries and developing countries being the most affected, with prices rising by 0.9%, and the prices of processed foods rising by 1.3%.

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Disruption of shipping routes exposes the vulnerability of supply chains.

The Report states that due to the decline in water levels in the Panama Canal and conflicts in the Red Sea, the volume of shipments through these key waterways has decreased significantly, dropping by more than 50% compared to the peak. Due to the extension of routes caused by shipping disruptions and the increased demand for ships, the supply of container ship capacity increased by 8.2% in 2023.

It is worth noting that the disruptions of the aforementioned maritime chokepoints have had varying impacts on different regions of the world.

According to the reporter, the Red Sea crisis that erupted last October continues to affect Suez Canal shipping, with many ship owners choosing to bypass the Cape of Good Hope at the southern tip of Africa. The Report states that this route change not only exacerbated congestion at South African ports but also disrupted the foreign trade of countries along the route. Specifically, the route change has brought opportunities to countries such as Madagascar, Mauritius, Namibia, and Tanzania, but some East African countries that are highly dependent on the Suez Canal for foreign trade have also been affected, with phenomena such as cargo spoilage and a shortage of standard containers, and supply chains for avocados, tea, and coffee have been affected.

In Asia, the disruption of the Suez Canal has also exacerbated congestion at Singapore's ports, mainly because after the route change, ships no longer refuel or unload at Middle Eastern ports but come to Singapore for transshipment. The Report shows that from March to May 2024, Singapore's waiting time almost doubled, from 24 hours to 40 hours, and the waiting time at the Port Klang port in Malaysia also increased by 6 hours to 26 hours.

In the Latin American region, severe droughts in 2023 and early 2024 led to a decline in water levels in the Panama Canal, forcing ships to choose longer and more expensive routes, a change that increased the distance traveled by 30%. Although the Panama Canal has attempted to improve water resource management this year, the transit volume still decreased by about 20% year-on-year. In terms of freight rates, in 2023, freight rates for the Europe-South America route decreased by 36%, while freight rates for the Africa-South America route increased by 20%.Port Connectivity: Asia Leads, Africa Grows, Latin America Faces Challenges

In terms of port connectivity, the report shows that Asian economies rank at the top of the global liner shipping connectivity index, with China, South Korea, and Singapore taking the top three spots. Vietnam has the highest increase in connectivity, growing by 199% since 2006.

African ports are gradually becoming important nodes in the global maritime network. The report states that from the first half of 2018 to the first half of 2023, the port calls of container ships in Africa increased by 20%, and the port calls of oil tankers increased by 38%, both setting the highest records in Africa. However, trade imbalances also pose challenges to Africa. The report says that carriers prioritize shipping goods to high-income markets such as Europe and the United States, and regions like Africa may face a shortage of empty containers.

The situation in Latin America is even more severe. The report states that over the past decade, the region's maritime connectivity has decreased by 9%, especially in the Caribbean, where port handling fees are two to three times higher than similar ports worldwide. High port handling fees, low process efficiency, poor management, and a lack of infrastructure are all factors that reduce trade efficiency. In addition, competition between cruise ships and cargo ships, as well as the phenomenon of incoming ships returning full and departing empty, further increase transportation costs.

The report suggests that if no action is taken, these connectivity gaps will exacerbate trade inequality.

China Delivered More Than Half of the World's New Ships Last Year

The report also delves into the world fleet, freight rates, port passage efficiency, maritime performance, and related laws.

The report says that in the field of shipbuilding, China, Japan, and South Korea continue to maintain their global leadership, accounting for 95% of global production. In 2023, China delivered more than half of the world's new ships for the first time.

In addition, the report focuses on several issues, including the slow pace of low-carbon shipping transformation and fraudulent ship registration, and calls for coordinated efforts to navigate, adapt, and develop in this complex environment.

The report expects that due to strong demand from steel producers, iron ore trade will continue to grow. Due to the expansion of storage and transportation infrastructure, the demand for natural gas in Asia and Europe is growing, and global natural gas trade is also on the rise. In addition, Asia's technology exports (especially green energy and artificial intelligence-related products) will promote further recovery of global commodity trade.