Overview of the World Economy & Shipping Industry
e year 2020, as the world faced a crisis like no other, national governments took bold steps to save lives and put a floor under the world economy, with nearly $12 trillion in fiscal actions and about $7.5 trillion in monetary actions. e global health and economic crisis triggered by the pandemic has upended the landscape for maritime transport and trade and significantly affected growth prospects. At one point, more than 80 countries had closed their borders to arrivals from countries with infections, ordered businesses to close, instructed their populations to self-quarantine, and closed schools to an estimated 1.5 billion children. It led to significant reductions in income, a rise in unemployment, and disruptions in the transportation, service, and manufacturing industries. It also led to significant economic impact across the globe due to reduced productivity, loss of life, business closures, trade disruption, and decimation of the tourism industry._ Estimates indicate the virus reduced global economic growth in 2020 to an annualized rate of -3.4% to -7.6%.
Although recent vaccine approvals have raised hopes of a turnaround in the pandemic later this year, renewed waves and new variants of the virus pose concerns for the outlook. e global economy is projected to grow 6.0 percent in 2021 and 4.9 percent in 2022 as per IMF
e coronavirus disease (COVID-19) pandemic has underscored the global interdependency of nations and set in motion new trends that will reshape the maritime transport landscape. e sector is at a pivotal moment facing not only immediate concerns resulting from the pandemic but also longer-term considerations, ranging from shi_s in supply-chain design and globalization patterns to changes in consumption and spending habits, a growing focus on risk assessment and resilience-building, as well as a heightened global sustainability and low-carbon agenda. e sector is also dealing with the knock-on effects of growing trade protectionism and inward-looking policies. e pandemic has brought to the fore the importance of maritime transport as an essential sector for the continued delivery of critical supplies and global trade in time of crisis, during the recovery stage and when resuming normality. At the beginning of 2020, the total world fleet amounted to 98,140 commercial ships of 100 gross tons and above, equivalent to a capacity of 2.06 billion dwt. Trade tensions caused trade patterns to shi_, as the search for alternative_ markets and suppliers resulted in redirection of flows away from China towards other markets, especially in South-East Asian countries. Shipping is a derived demand largely determined by developments in the world economy and trade. Owing to the slowdown in the world economy and trade, growth in international maritime trade stalled in 2019 and reached its lowest level since the financial crisis of 2008–2009. A number of factors weighed on the performance of maritime trade. These included trade policy tensions; adverse economic conditions and social unrest in some countries; sanctions; supply-side disruptions, such as the Vale dam collapse in Brazil and Cyclone Veronica in Australia; and low oil demand growth. UNCTAD (United Nations Conference on Trade & Development) estimates the total volume of maritime trade in 2019 at 11.08 billion tons.
Lingering trade tensions and high policy uncertainty undermined growth in global economic output and merchandise trade and by extension, maritime trade. Maritime trade volumes expanded by 0.5 per cent, down from 2.8 per cent in 2018 and reached a total of 11.08 billion tons in 2019.As the debate on the recovery continues to evolve, it is becoming clear that disruptions caused by the COVID-19 pandemic will have a lasting impact on shipping and trade. Potential shi_s range from changes in globalization patterns to alterations in supply-chain design, just-in-time production models, technology uptake and consumer spending habits.
In 2019, developing economies continued to account for the lions share of goods being loaded (58 per cent) and unloaded (65 per cent) in seaports worldwide. Dry cargo continued to account for over two thirds of total maritime trade volumes, while liquid bulk commodities, including crude oil, refined petroleum products, gas and chemicals, accounted for the remaining share. In 2002, China imported 121.7 million tons of iron ore and coal, accounting for 11.8 per cent of the global iron ore and coal trade by sea. In less than two decades, these volumes increased to 1.3 billion tons, bringing the country market share to nearly 50 per cent of the world total. Gas trade in ton-miles expanded swi_ly to 9.9 per cent in 2019. Other segments recorded relatively smaller growth; ton-miles generated by trade in chemicals expanded by 3.2 per cent, followed by container trade (1.9 per cent) and other dry cargo (1.6 per cent).
Since the onset of the shale revolution in the United States, developments in the countrys energy sector have played a significant role in shaping global tanker trade. is was apparent throughout 2019, with a decline in United States crude oil imports and a rise in its long-haul exports. Pressure on the crude demand side include lower global oil demand, a sharp reduction in United States imports and a decline in global refinery activity. With regard to imports, China and India remained key markets. In India, import demand for lique_ed petroleum gas was supported by the continued rollout of lique_ed petroleum gas infrastructure in rural areas under a government subsidy programme.
Seafarer Crisis - Each month about 150,000 seafarers need to be changed over as they operate to ensure compliance with international maritime regulations for ensuring safety, crew health and welfare, and the prevention of fatigue. e pandemic has led to restrictions in the cross-border movement of persons, closures of consulates affecting visa processing, port closures, disembarkation restrictions and lack of air services, which have impaired the ability to repatriate or resupply crews.
e pandemic has brought visibility to seafarers with the recognition that they provide an essential service because they ensure trade in essential goods, such as medical supplies and food, and they keep supply chains running. However, the slow pace of concrete actions highlights the challenges of balancing the safety and well-being of workers with operational continuity, which raises the question as to whether practices and procedures regarding crew changeover, disease management, health care and welfare need to evolve to enhance support for seafarers. Raising the Gender Bar- Further, the pandemic has provided an opportunity to raise awareness of the importance of gender in the maritime sector, including seafarers. Today, women represent only 2 per cent of the worlds 1.2 million seafarers; 94 per cent of women seafarers are working in the cruise industry. It is important to move forward and promote a safe and attractive sector that supports greater engagement for women.