UN Takes Aim At US Trade Policy

The uncertainty caused by rising protectionism will slow growth across the maritime sector over the next five years, according to a major new report from the United Nations (U.N.).

In a thinly veiled swipe at the trade policies of President Trump, the report said "trade tension and growth in protectionism" now top the list of downside risks for shipping.

"The dip in maritime trade growth is a result of several trends including a weakening multilateral trading system and growing protectionism," said Mukhisa Kituyi, secretary-general of the U.N. Conference on Trade and Development (UNCTAD).

"It is a warning that national policies can have a negative impact on the maritime trade and development aspirations of all."

Trade Forecast Downgrade

International maritime trade will increase by 2.6% in 2019 and continue rising at a compound annual growth rate of 3.4% over the 2019–2024 period, according to the latest forecasts in UNCTAD's Review of Maritime Transport 2019.

This follows growth of just 2.7% last year which was significantly below the historical average of 3% and also lower than the 4.1% growth recorded in 2017.

"World maritime trade lost momentum in 2018 as heightened uncertainty, escalating tariff tensions between the U.S. and China, and mounting concerns over other trade policy and political crosscurrents, notably a no-deal Brexit, sent waves through global markets," the report stated.

Containerized and dry bulk trades are expected to grow at compound annual growth rates of 4.5% and 3.9%, respectively, over the 2019–2024 period. The tanker trade — combined crude oil, refined petroleum products, gas and chemicals — is projected to grow by 2.2% during the same period.

Loss Of Momentum

The U.N. notes that many of the trade headwinds apparent during the past two years continue to cast dark shadows over the outlook for global trade and shipping and could result in the downgrade of forecast growth rates.

Downside risks include the U.S.-China trade war, Brexit, economic transition in China, geopolitical turmoil, natural disasters and disruptions to shipping routes and supply chains, as well as the transition to lower sulfur bunker fuels and low-carbon shipping.

The Balance Of Risk

While global growth and shipping demand could swing in a positive direction due to upside factors such as China's Belt and Road Initiative and various trade deals newly in place or in the pipeline, "the balance of risks to the outlook remains poor," notes the U.N.

The report highlights how the heightened trade tensions of 2018 and 2019 contrast sharply with past trends which saw trade liberalization and multilateralism "mainstreamed" into the global trading framework.

"United States tariffs are matched by retaliatory tariff increases on United States exports by Canada, China and the European Union and by other countries bringing disputes to the World Trade Organization," added the report.

Shipping's "New Paradigm"

The U.N. also argues that the industry's operating landscape has shifted to a "new paradigm" in which slower trade and economic growth compared with the pre-2009 era are creating new shipping demand and trade patterns. This is resulting in the regionalization of supply chains and the rebalancing of China's economy, as well as a larger role for technology and services in value chains and logistics.

The maritime sector is also facing "intensified and more frequent natural disasters and climate-related disruptions," which is making climate-risk assessment, adaptation and resilience building for ports an increasingly urgent priority, according to the U.N.

"Today, the maritime sector is dealing with much more than market uncertainty and short-term cyclical factors," added Shamika N. Sirimanne, director of UNCTAD's technology and logistics division. "Other factors that are structural and existential, such as technological disruptions and climate change, are at play and are redefining the sector."

More articles by Mike

Image by Anfaenger from Pixabay

Posted In: NewsEurozoneGlobalMarketsexportsFreightFreightwavesUnited Nations
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