Maritime transport and logistics require greater investment in infrastructure and sustainability to weather future storms, warns United Nations Conference on Trade and Development’s (UNCTAD) Review of Maritime Transport 2022. Especially for developing countries, such as the Maldives, there’s an 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,” said UNCTAD Secretary-General Rebeca Grynspan. “And we must not delay the decarbonization of shipping.”
According to UNCTAD, logistics supply constraints and a surge in demand for consumer goods and e-commerce pushed container spot freight rates to five times their pre-pandemic levels in 2021, reaching a historical peak in early 2022 and sharply increasing consumer prices. While the rates have dropped since mid-2022, rates for oil and natural gas tanker cargo remain high due to the ongoing energy crisis.
“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. She added that higher freight rates caused an increase in consumer prices while interrupted supply chains led to lay-offs and food insecurity.
Strengthen Global Supply Chains
UNCTAD calls 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 boost 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 digitalization. E-documents and electronic payments can cut waiting and clearance times in ports and speed up documentary processes.
Earlier in 2022, Maldives Ports Limited (MPL) launched a tech-oriented campaign called “Port Digital Koh”. MPL revealed that digital integration would reduce time taken to acquire documents, permits, and clearing all the other formalities, from six hours to 15 mins. The company aims to convert 99% of its operations into paper-less transactions by 2023.
Furthermore, MPL developed an online portal “My Bandharu”, which offers customers information such as Estimated Time of Arrival (ETA) of vessels, details of vessels that are presently docked at the harbour, container discharge details, monthly port statistics, details of frequent clearing agents and shipping agents, traffic information, and company policy information. The company also introduced an Electronic Gate Pass (EGP) to automate the clearing process.
Cut Carbon Footprint
The Maldives is among the most vulnerable countries to climate change and global warming.
UNCTAD calls 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, optimizing operations, using on-shore electricity when in ports and equipping vessels with energy-efficient technology.
“In terms of green and climate regulation we must move from the many and messy rules we have now, to one system that is good for all,” said UNCTAD Secretary-General Grynspan, who called for “predictable global rules” to support the industry, ports, and shipowners.
UNCTAD calls for measures to protect competition needed in the face of market consolidation, with the top 20 carriers increasing their share of container-carrying capacity from 48% to 91% over the past 26 years.
Competition and port authorities should work together and respond to industry consolidation with measures to protect competition. The UNCTAD report urges stronger international cooperation on cross-border, anticompetitive practices in maritime transport, based on the UN Set of Competition Rules and Principles.