Global maritime trade dips on US-China trade tensions and Brexit uncertainties

Trade tensions between the US and China and uncertainty surrounding Brexit have affected global maritime trade, causing lost momentum in 2018 leading to volumes reaching 2.7 per cent, below the consistent averages of 3 per cent over a long period and an all-time high of 4.1 per cent recorded in 2017, the United Nations Conference on Trade and Development (UNCTAD) reported last week.

According to UNCTAD, total volumes are estimated to have reached 11 billion tons, an all-time high, according to its records, and the UN agency is projecting 2.6 per cent growth in 2019 and an annual average growth rate of 3.4 per cent for the period 2019–2024.

“However, the outlook remains challenging, given the heightened uncertainty regarding trade policy and wide-ranging downside risks clouding the horizon,” it said.

The UNCTAD also noted that world merchandise trade growth decelerated at an unexpected rate in 2018, and tariffs on trade between China and the United States of America escalated amid mounting trade tensions and a proliferation of national trade-restrictive measures.

Apart from trade policy crosscurrents, geopolitics and sanctions, environmental concerns, fuel economics and tensions involving the Strait of Hormuz – a strategic maritime chokepoint – were in the headlines, it added.

“The dip in maritime trade growth is a result of several trends including a weakening multilateral trading system and growing protectionism. It is a warning that national policies can have a negative impact on the maritime trade and development aspirations of all,” said Mukhisa Kituyi, the UNCTAD Secretary-General.

UNCTAD states further that buffeted by a global economic slowdown, in 2018, seaborne trade also navigated other difficult headwinds such as geopolitical tensions, while preparing for an expected surge in ship fuel costs arising from a new regulation requiring ships to cut their sulphur dioxide emissions.

“UNCTAD expects international maritime trade to expand at an average annual growth rate of 3.4 per cent over the 2019–2024 period, driven in particular by growth in containerized, dry bulk and gas cargoes. However, uncertainty remains an overriding theme in the current maritime transport environment, with risks tilted to the downside,” it said.

By Emmanuel K. Dogbevi

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