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IUMI 2010 ZURICH. 12 – 15 September Shipping and global trade : A review of major developments Hassiba Benamara UNCTAD. CONTENTS. I.Macro factors Economic growth and merchandise trade II. Shipping and seaborne trade Demand: seaborne trade Supply: fleet developments Freight rates

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IUMI 2010 ZURICH

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Iumi 2010 zurich

IUMI 2010 ZURICH

12 – 15 September

Shipping and global trade:

A review ofmajordevelopments

Hassiba Benamara

UNCTAD


Contents

CONTENTS

I.Macro factors

  • Economic growth and merchandise trade

    II. Shipping and seaborne trade

  • Demand: seaborne trade

  • Supply: fleet developments

  • Freight rates

    III.Emerging challenges and some relevant issues to monitor

  • Environment

  • Energy

  • Other


12 to 15 september 12 to 15 september

I. Economic growth and merchandise trade


The first and deepest contraction 1 9

The first and deepest contraction (-1.9%)…

… in global output since the 1930s

World GDP and trade (real), 1971-2010

UNCTAD and WTO, 2010


Broad based and varied speed

Broad-based and varied speed

World GDP (% annual growth), 2004-2010

UNCTAD, 2010


The great trade collapse

The “Great Trade Collapse”

World GDP and trade (real), 1971-2010

UNCTAD and WTO, 2010


Adverse trade shocks across regions

Adverse trade shocks across regions

World merchandise trade, 2009

UNCTAD , 2010


An unprecedented trade contraction

An unprecedented trade contraction

  • Merchandise exports dropped 7 times more rapidlythan global GDP (elasticity ≈ 2 in 60s and 70s and 3.4 in 90s). UNCTAD estimate for 1971-2010 ≈ 2.5.

  • Synchronized drop.

    Multiplier effect:

    • Globalised production and increased trade in parts and components.

    • Product composition of the fall in demand (e.g. consumer goods and durables, higher income elasticity).

    • Trade in goods drops faster than trade in services which account for a larger share of GDP.

    • Deepening and widening of global supply chains.

    • Limited trade finance (in addition to demand shock).


But there are signs of recovery in economic indicators

BUT…… there are signs of recovery in economic indicators…


Business confidence is improving

Business confidence is improving…

Manufacturing Purchasing Managers’ Index, 2007-2010

IMF, WEO Update, July 2010


So does consumer confidence

…so does consumer confidence…

Retail sales, 2007-2010

IMF, WEO Update, July 2010


And industrial production

…and industrial production

Industrial production, 2007-2010

IMF, WEO Update, July 2010


Gdp growth turned positive in q2 2009

GDP growth turned positive in Q2-2009…

…UNCTAD expects GDP to grow by 3.5% in 2010

World GDP (% annualgrowth), 2007-2010

IMF, WEO Update, July 2010


World exports forecast to grow

World exports forecast to grow…

…by + 9.5% in developedeconomies and +7% in ROW

Merchandise exports, 2007-2010

IMF, WEO Update, July 2010


Commodity prices are also rising

Commodity prices are also rising

Commodity price indices (actual and forecast, 2000=100), 2004-2011

World Bank, 2010


Longer term outlook and a new global design

Longer term outlook and a new global design

Major industrialized countries

  • Twenty years up to 2009: +2.2%

  • Next twenty years forecast: +1.8%

    Major developing countries

  • Twenty years up to 2009: +6.3%

  • Next twenty years forecast: +5.9%

    World average

  • Twenty years up to 2009: +2.9%

  • Next twenty years forecast: +3.5%

    World exports (tons):

    - Expected to double in the next 20 years.

Source: IHS-Fairplay, as presented to IAME 2010, Lisbon, July 2010


12 to 15 september 12 to 15 september

II. Shipping and seaborne trade


Unsheltered from shocks in the wider economy

Unsheltered from shocks in the wider economy…

Total

a

Year

Oil

Other dry cargo

Main bulks

(all cargoes)

1 442

448

676

2 566

1970

1 871

796

1 037

3 704

1980

1 755

968

1 285

4 008

1990

2 163

1 288

2 533

5 984

2000

2006

2 698

1 849

3 135

7 682

2 747

1 972

3 265

7 983

2007

2008

2 732

2 079

3 399

8 210

b

2 649

2 102

3 092

7 843

2009

…seabornetradecontracted (-4.5%) in 2009

World seabornetrade (tons), 1970-2009

+1.1%

-3%

-4.5%

-9%

UNCTAD RMT, 2010


All shipping segments negatively affected

All shipping segments negatively affected…

Seaborne trade (% change), per cargo type, 2009-2010

2009

2010f

Iron ore

8%

6%

Coal

1%

9%

Grain

-2%

2%

Bauxite and Alumina/Phosphate Rock

-27%

18%

Major dry bulk

1%

7%

Minor dry bulks

-13%

9%

Other dry cargo

-9%

6%

of which container

-9%

11%

Oil

-3%

3%

Total seaborne trade (tons)

-4.5%

5.2%

…but major dry bulk cargo heldstrong; China factor

UNCTAD, RMT 2010; Clarkson Shipping Review (spring 2010), Dry Bulk Outlook, August, 2010, and Container Intelligence Monthly, August, 2010


2009 a dramatic year in the history of container shipping 9 4

2009, a dramatic year in the history of container shipping (-9.4%)

Global container trade, 1990-2010

UNCTAD, based on Clarkson Research Services and Drewry Consultants


12 to 15 september 12 to 15 september

Fleet developments


Growth in ship supply capacity continues

Growth in ship supply capacity continues…

…1.27 billion dwt at the beginning of 2010, 7% increase

World fleet by vessel type in million dwt, 1980-2010

UNCTAD, based on IHS- Fairplay data


Record new deliveries 42 in dwt terms and an impressive orderbook

Record new deliveries (+42% in dwt terms) and an impressive orderbook

World tonnage on order, 2000-2010 (000’ dwt)

UNCTAD, based on IHS- Fairplay data


Wider supply and demand imbalance

Wider supply and demand imbalance…

…as illustrated by container shipping

Supply and demand in container shipping, 2000-2010

UNCTAD, based on Clarkson Container Intelligence Monthly


12 to 15 september 12 to 15 september

Freight rates


D s determine freight rates

D/S determine freight rates…

  • The year 2009 was a bleak year for freight rates in all market segments.

  • By the end of 2009, rates in all sectors have recovered from their earlier lows albeit still significantly below their pre-crisis levels.

  • Freight rates for 2010 and beyond remain volatile and uncertain.


Baltic tanker indices 2005 2010

Baltic Tanker Indices, 2005-2010

…tanker rates fell with falling oil demand

UNCTAD , based on Lloyd’s Shipping Economist data


Dry cargo freight indices 2004 2010

Dry cargo freight indices, 2004-2010

…dry bulk rates supported by demand from China…

3000

2500

2000

1500

1000

500

0

Jul-09

Jul-04

Jul-05

Jul-06

Jul-07

Jul-08

Nov-09

Nov-04

Nov-05

Nov-06

Nov-07

Nov-08

Sep-09

Jan-10

Jan-04

Sep-04

Jan-05

Sep-05

Jan-06

Sep-06

Jan-07

Sep-07

Jan-08

Sep-08

Jan-09

May-09

Mar-10

Mar-04

May-04

Mar-05

May-05

Mar-06

May-06

Mar-07

May-07

Mar-08

May-08

Mar-09

Tramp

Trip

UNCTAD, based on ISL-Shipping Statistics and Market Review


Container freight rates 2005 2009

Container freight rates, 2005-2009

… container rates supported by a series of counter-measures

UNCTAD, based on Containerisation International data


Summary of key points 1

Summary of key points (1)

  • 2009, a record in history.

  • Prospects are improving; recovery varying in speed, driven by emerging developing economies (e.g. Asia).

  • Various forecasts for 2010/2011 (UNCTAD, IMF, WB, IHS-Fairplay, …); all positive.

  • World merchandise trade is forecast to grow in 2010 and 2011(e.g. WTO and World Bank).

  • World seaborne trade also forecast to grow in 2010 and 2011.


But the outlook remains fragile in view of various downside risks

BUT…… the outlook remains fragile in view of various downside risks…


Summary of key points 2

Summary of key points (2)

  • Sustainability of recovery, strength and shape (V, U or W)?

  • Public debts

  • Unemployment and bank lending

  • Stimulus packages (duration/end)

  • Is observed trade recovery driven by new demand?

  • Supply-side pressures

  • Known and unknown crises


Iii emerging challenges and issues to monitor

III. Emerging challenges and issues to monitor

  • Energy: access, security and prices

  • Climate change: mitigation and adaptation

  • Seafaring crisis?

  • Supply chain security and piracy

  • Other global crises: e.g. food, water, financial…

  • Geopolitics

  • Other ?


Focus on two emerging global challenges

Focus on two emerging global challenges

Climate change & energy: interconnected

  • Climate change mitigation action has implications for ship design, engines, fuel systems, operations, services , management, value, etc.

  • Indirect implications through changes in demand for shipping services. E.g. climate induced changes in trade structure, flows and patterns through impacts on sectors such as energy production and consumption, agriculture and food products, demography and human settlement, etc.

  • Climate change mitigation and adaptation require energy. However, there are signs of a looming energy crisis. Shipping is heavily reliant on oil for propulsion and not yet in a position to effectively and widely adopt substitutes.


12 to 15 september 12 to 15 september

Conclusion?


12 to 15 september 12 to 15 september

Additionnal information and publications by UNCTAD, including on oil prices and

maritime freight rates, maritime transport and the climate change challenge, as

well as supply chain security are available at:

UNCTAD Trade Logistics Branch

www.unctad.org/ttl/legal

UNCTAD’s annual Review of Maritime Transport and quarterly Transport

Newsletter are available at: www.unctad.org/transportnews


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