Around the globe, ships transport 80 percent of all goods. In some developing countries that percentage is even higher. There is a scramble to bolster anything that might impact the transport of goods and disrupt the supply chain such as fuel and inflation. The impacts are felt around the world.
Carbon emissions due to the maritime fleet have also steadily increased. Many credits the increase with the number of ships now sailing and the age of the ships that have been enlisted to fill the supply chains growing needs. The average age of many ships currently in service is 22 years old.
In order to curb the increasing carbon emissions, many believe that the old vessels need to be replaced so that the industry can focus on a low-carbon future. Many, such as UNCTAD Secretary-General Rebeca Grynspan, are calling for predictable global rules.
She stated to reporters in Geneva, “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. This is critical given the highly uncertain environment, with conflict
risks…and unknown price of carbon in the future.”
Borrowings cost are projected to cause problems when it comes to replacing older ships with newer, more eco-friendly ones. However, there is a strong call for support to developing countries to assist with the transition to zero-carbon fuels.
UNCTAD 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.”
If there is a greater investment in shipping logistics, then inflationary pressures will ease and not hold back the industry which will benefit the world long term.
During the COVID-19 pandemic, therewas a substantial shortage of container ships. The rapidly growing demand forconsumer goods pushed by e-commerce was insatiable. It drove many shippingcompanies to reenlist the aging cargo ships. The freight rates quickly rose to five times what it was before the pandemic. The ships are still being used despite their high emission rates and other issues.
In early 2022 the demand for containerships reached a record high. Consumer prices also increased substantially. Withthe arrival of the middle of the year the prices did drop but the cost of oiland natural gas tanker cargo container ships remains unrelenting due to theongoing energy crisis fueled by the Ukraine war and sanctions against Russia.
UNCTAD’s Review of Maritime Transport 2022 report showed that the cost of grain increased due to the war in Ukraine coupled with COVID-19 and supply chain problems. It will probably continue to cause increases in consumer food prices with projections holding at 1.2 percent which can impact middle-income countries substantially.
Shamika Sirimanne, Director of UNCTAD’s technology and logistics division stated, “If there is one thing, we havelearned from the crisis of the last two years it is that ports and shipping greatly matter for a well-functioning global economy.”