Will 2021 Be A Good Year For Maritime Trade?

As per the United Nations Conference on Trade and Development, the global pandemic caused maritime trade to drop by 4.1 percent in 2020. Supply chains, ports, and shipping networks were all significantly hit, leading to a dramatic drop in cargo volumes and reducing growth prospects.’

2021 could potentially be a good year as UNCTAD forecasts maritime trade to grow by 4.8 percent, provided economic output recovers. However, the short-term outlook may not be as optimistic. The maritime transport industry needs to brace itself and prepare for transformation in a post-COVID19 world.

Mukhisa Kituyi, UNCTAD Secretary-General, said that the shipping industry would be at the forefront of sustainable economic recovery in the coming year. However, being a key stakeholder in the industry, it needs to adapt ‘just-in-time efficiency’ logistics and ‘just-in-case preparedness.’

How are different maritime industries poised?

As the current year is nearing the end, shipping companies are readying up to release their third-quarter results. There are no warning signals that the industry is facing any adverse effect due to the current pandemic.

There was an increase of 2.7 percent in global containerized trade during the July-September period. It is just 3 percent behind during the same period in 2019, and September alone registered a 6.9 percent growth in 2020.

The beginning of the year saw worldwide lockdowns being imposed to contain the spread of the virus. In April 2020, at the height of the pandemic lockdown, the carrier industry recorded a 13.1 percent volume slump. In contrast, the third quarter has seen an amazing turnaround, which bodes well for the maritime industry as a whole.

Import demand in the US ports has been rising faster than expected. Hence, industry experts are confident that freight rates will continue to be high even in the final quarter of 2020.

In recent weeks, tanker earnings have dropped, and the sector may not benefit from increased floating storage. Despite the current situation, the US Gulf crude exports are beating all odds as refineries in Europe and Asia continue to purchase large volumes.

The International Monetary Fund forecasts that all world markets will see a significant bounce back in 2021, and only China may record a GDP growth. The forecast is based on the assumption that the pandemic situation will be controlled, allowing world economies to recover. The news of a potential vaccine being available in the coming weeks and months has also uplifted the stock markets.

One of the primary reasons why container carriers have been able to register high freight rates is capacity discipline. The shipping industry prospects also look bright as more ships return to service, accounting for almost one-fifth more capacity on some routes compared to last year.

Despite the global economy recovering, it is only expected to return to growth in the second half of 2021. Even though the coming year looks positive, the shipping industry must still proceed with caution.