Review of Shipping Market 2022

Following a 3.8% decline in seaborne trade volumes in 2020, international seaborne trade rebounds in 2021, growing by around 3.2% to a total of 11 billion tonnes. Because trade is still suffering from the long-term effects of the New Crown epidemic, seaborne trade volumes remain slightly below pre-outbreak levels, with a sharp rise in demand and a shortage of supply-side capacity leading to unprecedented congestion in global maritime transport. The increase in trade volumes was driven mainly by demand for containerised cargo, with LNG and dry bulk shipments also increasing, while trade in crude oil shipments fell from 16.0% to 15.5%.

I. International Maritime Trade

UNCTAD expects maritime trade growth to slow to 1.4 per cent in 2022 and to average 2.1 per cent per annum over the period 2023-2027, down from an average of 3.3 per cent over the previous 30 years.

Container trade booms, dry bulk market improves, but oil shipments stagnate Container trade, LNG shipments and dry bulk commodities (iron ore and grains) are growing steadily in 2021, but crude oil shipments are trending downwards due to high oil inventories, oil production cuts, falling demand for transportation fuels and slowing demand from China.

Container trade is buoyed by merchant replenishment of stocks and a recovery in consumer demand. the container market performs well in 2021, driven by demand for consumer goods, particularly from East Asia, with volumes rebounding to 165 million TEU in 2021. improved global economic conditions, combined with the release of pent-up demand, further merchant replenishment of stocks, and a growing number of e-commerce platforms This growth is being driven by expanding trading volumes.

Dry bulk trade has improved but still faces headwinds and a shift in trade patterns. 2021 will see dry bulk trade, including major and minor commodities, grow at an annual rate of 3.5%, with total volumes of around 5.5 billion tonnes. This is supported by a strong recovery in China's economy and industry, improved global macroeconomic conditions, the release of pent-up demand and a boost from economic stimulus policies. Growth came mainly from increased demand for secondary commodities (5%) and 2.5% for major commodities.

Tanker trade was impacted by lower demand and OPEC+ production cuts. While total tanker trade increases by 1.2% to approximately 3 billion tonnes in 2021, it declines by 7.7% in 2020 before that. Other tanker trade, including refined petroleum products and natural gas, grew by 4.1%, but crude oil trade continued to contract, falling by around 1%. Crude oil shipments were affected by high prices, high inventories, OPEC+ production cuts and lower demand for transportation fuels due to the epidemic.

The global economic environment remains complex in 2022, with inflation and the cost of living on the rise. In China, the world's largest exporter, the zeroing policy is putting pressure on manufacturing, logistics and supply chains. In Ukraine, a major food exporter, ports on the Black Sea have also been closed since the war began. Strike action in many ports around the world, including Germany, South Korea, South Africa and the US, also affected shipping. At the same time, a series of extreme weather events such as floods, hurricanes and heat waves in Australia, Brazil, Pakistan, East Africa, Europe and the United States have caused many difficulties, all of which have caused many problems for global supply chains, logistics, and maritime trade.

II. Maritime Transport Services

The total maritime merchant fleet grew at a slower rate of around 3% in the 12 months from January 2021 to January 2022. The increase in the average age of ships from 20 to 22 years is partly related to the uncertainty of owners and operators about future fuel prices, environmental regulations and technological developments, delaying investments and keeping older ships in operation. Faced with new regulations and fuel types, owners may also choose not to recycle their existing vessels and instead invest in new, more environmentally friendly vessels. But costs will be raised and, as a result, recycling efforts will be increased.

At the beginning of 2022, the average age of ships continues to increase, with 11.1 years for bulk carriers, 13.7 years for container ships and 19.7 years for tankers, and 27.1 years for bulkers.

III. Ocean Freight Rates and Transport Costs

From the end of 2020, spot container freight rates started to rise sharply and reached a new high at the end of 2021. This trend can be reflected in the Shanghai Container Freight Index (SCFI), which tracks prices on major trade routes from Shanghai. in December 2019, the SCFI is 898 points, but by December 2020 it is 2,455 points and by December 2021 it is almost 5,000 points.

Container ship charter rates are also at record highs, driven by surging market demand and limited vessel capacity. the New ConTex index for the container ship charter market averages 432 points in 2020, but rises to an average of 1974 in 2021 and tops out at an all-time high in early 2022.

Strong demand and port congestion have pushed dry bulk rates to new highs, while a steady economic recovery and fiscal stimulus have also boosted industrial activity, increasing demand for most dry bulk commodities such as grains, iron ore and coal. But vessel availability was limited by the New Crown epidemic and port congestion, with dry bulk vessel time in port increasing by 2.3% in 2021 dry bulk vessels increased by 2.1% and new vessel deliveries declining by 21%.

The Baltic Exchange Dry Index (BDI), which records the average cost of transporting raw materials such as grains, coal and iron ore, has tripled from October 2019 to October 2021, reaching a record high of nearly 5,000 points. The dry bulk market was further affected by bad weather in Asia and North America, which continued to push up freight rates. late 2021 saw a sharp fall in bulk freight rates, driven by seasonal changes and the economic situation in China. From the end of October 2021 to the end of December 2021, the BDI fell by 40% to 2,832 points.

It fell to 1,760 points in January 2022 and the downturn continued into the first few months of 2022, with port congestion remaining a major issue and the Port Congestion Index for dry bulk cargoes remaining at around 35%. Since then, market demand has been increasing, with the impact of the Russia-Ukraine conflict offset by increased grain exports from Brazil and the lifting of the export ban, with the BDI reaching 2943 by May 2022.

The volume of oil traded offshore in 2021 remains below pre-epidemic levels, with long-haul crude oil exports from the Middle East and the US falling sharply. At the same time, however, tanker supply continues to grow, with more vessels being delivered than scrapped, particularly large crude carriers. As a result, freight rates have fallen sharply.

Between 2020 and 2021, the average daily revenue for tankers fell from US$24,877 to US$6,416, the lowest level on record. It recovered at the end of the year as crude oil prices rose.

IV. Key Performance Indicators for Ports and Fleets

Number of port calls and turnarounds: Compared to the same period in 2020, the number of global cargo ship calls in ports increased in the first six months of 2021 and continued to rebound in the second half of 2021. in the first nine months of 2022, the number of calls was also on the rise for all vessel types, except for container ships, which faced continued congestion. Despite the decrease in the number of port container ship calls, global container trade volumes and port throughput are still increasing, partly due to an increase in the volume of shipments per vessel and better utilisation of vessel capacity. For example, between 2020 and 2021, the proportion of container ships that are fully loaded rises from 52% to 60%. In addition, liner companies have jumped some ports, such as Singapore. On the US West Coast route, some shipping service companies have eliminated double callings for loading and unloading in two ports.

Port waiting times and cargo handling efficiency: The World Bank and S&P Global have created a Container Port Performance Index for 2021, with ports from the Middle East, the Mediterranean and East Asia performing best. Of the 25 highest ranked ports, the Middle East and Mediterranean region has 10, up from 4 in 2020. East Asia is down from 15 to 8.

In Europe, ports in the South West rank higher than those in North West Europe, where ports are spending more time on terminal operations due to a surge in cargo volumes and where liner companies have consolidated some port demand to mitigate the risk of erratic demand and congestion. There were heavy queues at ports on the west coast of the USA.

Severe port congestion and increased waiting times for dry bulk vessels. the average waiting time for the 30 main countries involved in dry bulk trading increased from 50 hours to 67 hours between 2019 and the first half of 2022. This is mainly caused by strict prevention and control requirements, such as mandatory quarantine and negative testing. (In 12 of the top 30 countries, waiting times for loading increased by more than 50%, with the highest increases in Colombia, Oman and Norway).

The experience of port management programmes: from a gender perspective, the port industry remains generally dominated by men. in 2021, the median participation of women in port management is 42% globally and 60% in Asia. However, women's participation in the total port workforce remains low at 17%, and even lower in port operations at 6% and in cargo handling at 8%.

Liner shipping connectivity: China extends its lead and while most other countries experienced a decline in connectivity in the second quarter of 2022, four Asian countries maintained strong connectivity: China, the Republic of Korea, Singapore and Malaysia. China, in particular, has deployed more capacity on its trade routes with the US, further extending its lead. Connectivity is declining in most regions of the world, as the epidemic may have prompted a process of regionalisation and a gradual shift from global to regional supply chains.

Greenhouse gas emissions from the world fleet: between 2012 and 2022, carbon intensity has steadily declined over the last decade, by 21% for container ships and 18% for bulk and general cargo ships. In comparison, the decline for tankers is only 1%; the carbon intensity of tankers bottoms out in August 2018 and then peaks in October 2020. Between 2020 and 2021, total emissions from the global fleet increase by 4.7%, with most of the increase coming from container ships, dry bulk carriers and general cargo ships. Maritime trade in terms of ton-miles increases by 3.1% in 2021, mainly due to a resurgence in maritime transport activity, and a slight increase in CO2 emissions per ton-mile.

V. Maritime Trade Facilitation

Trade facilitation helps to ease supply chains: port congestion is often the result of inefficient procedures, and faster and more efficient customs clearance contributes to trade facilitation. These measures involve close cooperation between institutions and the private sector, and good trade facilitation is based on four basic principles: harmonisation, standardisation, simplification and transparency. When applied to port and inland transport procedures, these principles can significantly reduce delays in the supply chain, particularly in developing countries with poor port handling capacity.

Contingency measures: trade facilitation for critical goods: Many countries do not have regulations or procedures in place for fast customs clearance of critical goods, and vaccines and medical equipment often face administrative barriers. In times of crisis, countries sometimes restrict the export of medical supplies. Crisis response plans for trade facilitation are therefore needed in all countries and, in addition, rapid crisis response requires reliable infrastructure for the timely and good delivery of emergency supplies.

Trade facilitation for better port performance: Adapting to reshaped global value chains and new maritime business models, responding to supply chain crises increasingly involves digital and smart technologies. That means extensive use of connectivity, automation, machine learning and real-time data. the WTO Trade Law Agreement, which entered into force in 2017, encourages the adoption of e-services and internationally harmonised paperless systems. This change was given further impetus during the new crown epidemic and the war in Ukraine.

Public-private cooperation: as supply chains and links between ports and their hinterlands become more complex, trade facilitation requires closer cooperation between public and private sector stakeholders. Port sectors must also be managed collaboratively to mitigate risks, for example, ASEAN encourages the use of alternative modes of transport such as rail and road transport, and flexible and comprehensive multimodal transport. At the same time, cooperation can also be supported through a number of technology-driven innovations, one of the most important options being the maritime single window.

VI. Consolidation and Competition Among Liner Shipping Companies

Consolidation trends: In recent decades, the container shipping sector has experienced a continuous consolidation, including: horizontal mergers through mergers and acquisitions, vertical integration through operator investment in terminal operations and other logistics services, and strategic cooperation in the form of alliances.

The impact of consolidation on the market: Firstly, freight rates depend on many factors, but one of the most important effects is competition. Empirical evidence shows that the more carriers there are, the more likely it is that costs will be passed on to shippers. Secondly, when bidding for concessions to operate ports or terminals, investors also compete for markets, and vertically integrated firms are more competitive. In addition, consolidation will give companies a larger market share, thus providing shippers with more options.

Policy considerations: 1. Support smaller and vulnerable economies, SIDS, especially LDCs, need support in building the capacity of national regulators and port authorities. 2. Include alliances and consortia in competition assessments, and competition authorities should clarify what alliances and consortia can legally do. 3. Keep ports competitive, and vertical integration of operators can help modernise facilities, improve services and increase the number of competitors in ports, but may also create access problems or discriminatory treatment for competitors in port facilities. 4. seize opportunities for international cooperation.

VII. Legal Issues and Regulatory Developments

Impact of the New Crown epidemic on maritime law: The ongoing New Crown epidemic and response has led to significant disruptions and delays in the global network, with important implications for the performance of international commercial contracts. Legal consequences and claims arise in cases where contractual performance is interrupted, delayed or even prevented. In response, the contracting parties made a number of suggestions: 1. For charter contracts, the parties should consider including a contractual risk-sharing clause. 2. To resolve disputes during an epidemic, the parties could contract for jurisdiction or arbitration in a forum where hearings would be able to continue online. 3. Use an amended force majeure clause where performance is subject to a listed force majeure event that is "4. some cost sharing provisions should be added to the epidemic clause. 5. additional clauses dealing with crew changeover matters, transporting sick crew to shore hospitals and the mechanism for sharing related costs. 6. for voyage charters 7. For time charters, charterers could negotiate to add the word "any other cause" after "whatsoever". 8. 8. The terms of the bill of lading could be amended to ensure that the risks associated with an epidemic are more equitably shared.

For policy makers, the following recommendations were made: 1. Crews should be allowed to change shifts at any time to ensure that no one is forced to work for longer than the maximum period stipulated in the Maritime Labour Convention 2006. 2. In order to resolve costly legal disputes arising from delays in documentation, the remaining legal and regulatory barriers to the introduction of electronic documents in international trade need to be removed. 3. Governments should avoid delays as much as possible while ensuring compliance with cross-border inspections of cargo shipments, especially for road cargo in transit. 5. Governments should consider strengthening dispute resolution mechanisms.

Regulatory developments related to international shipping, climate change and other environmental issues: In the autumn of 2021, just before COP26, more than 200 maritime industry organisations signed the "Call to Action to Decarbonise Shipping Towards Zero Alliance", urging the adoption of industry-wide zero emissions targets by 2050 and the commercial deployment of zero-emission vessels by 2030. commercial deployment of zero-emission vessels by 2030. In addition, 2022 will be characterised by an unprecedented increase in the frequency and intensity of extreme weather conditions. Strong legal and regulatory frameworks will therefore need to be put in place to adapt ports and other key transport infrastructure to climate change. A range of regulatory actions have been taken to protect the marine environment and biodiversity, including air pollution prevention and control, addressing plastic pollution, ballast water management, and liability and compensation for oil pollution from ships.

Seafarers: UNCTAD, together with the International Maritime Organization, the International Labour Organization and the International Health Organization, called on governments, national and local authorities and all stakeholders, including shipowners, to take the following ten key actions: (a) Facilitate medical escorts for seafarers. (b) Designate seafarers as "key workers", provide essential services to facilitate seafarers' shift changes and safe travel, and recognize relevant documentation. (c) To the extent possible, prioritise the vaccination of seafarers, in line with WHO recommendations, and exempt any national policies that require proof of vaccination as the only mandatory condition for entry. (d)Provide seafarers with appropriate personal testing and protective equipment to enable timely detection of cases and action to be taken (e)Ensure that international standards are consistently applied (f)Ensure the adoption and implementation of the legal instruments: MLC, 2006 and Seafarers' Identity Documents Convention (Revised). (g)Implement the WHO Guidelines for the Management of New Coronary Pneumonia Outbreaks on Cargo Ships and Fishing Vessels published in December 2021, (h)Provide public key certificates related to health certificates to relevant trust networks such as ICAO for international travel. (i) Continued cooperation in regularly updating guidance and establishing mechanisms to respond effectively to medical emergencies at sea. (j) Collaborative efforts to protect the safety of seafarers and prevent supply chain disruptions. In addition, as of 15 August 2022, 78 cases of seafarer abandonment have been reported this year. a record 95 cases were reported during 2021, of which only 31 have been resolved.

Meanwhile, the war in Ukraine has taken its toll on merchant shipping, with more and more ships stranded in war zones, raising concerns for the welfare of thousands of seafarers. in April 2022, the IMO Maritime Safety Committee adopted a resolution to urgently evacuate seafarers from the Black Sea and Assyrian Sea and surrounding war zones.

With regard to the status of women in shipping, the first IMO International Day of Women in Maritime Affairs (18 May 2022) provides a special platform to celebrate and highlight the achievements of women in international maritime trade and transport and to improve the gender balance and diversity of the industry.

Other legal and regulatory developments affecting transport: 1. Combating fraudulent ship registration and registrations: In 2021, IMO adopted a resolution to prevent fraudulent practices such as fraudulent registrations. 2. Encouraging all countries to ratify the 2010 Hazardous and Harmful Substances Convention 3. Implementing regimes related to multimodal transport: ESCAP prepared the harmonization of key common provisions on multimodal transport within national legal systems Guidelines, UNCITRAL held two expert group meetings to facilitate the development of a new instrument on negotiable multimodal transport documents.4. Other regulatory developments relating to electronic trade documents: a project on electronic trade documents initiated by the Law Commission of England and Wales was implemented in 2021.5. Protection and sustainable use of marine biodiversity beyond areas of national jurisdiction: in 2022, under the Negotiations continue under the auspices of the United Nations on a legally binding instrument on the conservation and sustainable use of marine biodiversity beyond areas of national jurisdiction in accordance with the 1982 Convention on the Law of the Sea.