As per sources, the pace of global shipping activity is predicted to lose steam this year as economic turmoil, conflict in Ukraine and the impact of the continued pandemic weaken the outlook for trade.
Some of the world’s largest investment banks are expecting global economic growth to slow down further in 2023, due to previous year’s Russian invasion of Ukraine and soaring inflation.
The slowdown has a dominos effect upon the shipping industry too, which transports more than 80% of global trade, although tanker freight rates could stay high. In all 2023-2027 period is expected to grow at an annual average of 2.1%, which is slower rate than the previous three-decade average of 3.3%. UNCTAD (United Nations Conference on Trade and Development ) said, “downside risks are weighing heavily on this forecast”.
“The recovery in maritime transport and logistics is now at risk from the war in Ukraine, the continued grip of the pandemic, lingering supply-chain constraints, and China’s cooling economy and zero-COVID policy, along with inflationary pressures and the cost-of-living squeeze,” UNCTAD said in their report to sources.
There was a surge in consumer spending in 2021, which pushed container shipping markets to record levels with ports backed up globally, which was also partly due to the effects of lockdowns.
As per UNCTAD the “logjam in logistics will dissolve with the rebalancing of demand and supply forces”, but added the risks of industrial action in ports and hinterland transport had increased.
UNCTAD is asking for investment in maritime supply chains to enable ports, shipping fleets and hinterland connections to be better prepared for future global crises, climate change and the transition to low-carbon energy.
Crux is that we need to plan and prepare to cope up with any possible shocks to global value chains.
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