ISLAMABAD: United Nations Conference on Trade and Development (UNCTAD) says that seaborne shipments passed 10 billion tonnes for the first time ever in 2015, up 2.1 per cent from 9.8bn tonnes the year before, noting that this is the slowest pace of growth in the industry since 2009 and that future growth looks uncertain.

The ‘Review of Maritime Transport 2016’ released on Monday by UNCTAD says that shipping carried more than 80pc of the world’s goods by volume in 2015, and its slow growth reflects sluggish global trade, albeit with variations in the different sectors.

According to the review, shipments expanded by 2.1pc, a pace notably slower than the historical average. The tanker trade segment recorded its best performance since 2008.Shipping of oil recorded its best performance since 2008, thanks to low oil prices, ample supply and stable demand.

But shipping’s overall growth was dragged down by the limited growth of dry bulk commodity trade, in particular coal and iron ore, and by the poor performance of container shipping, which carries about 95pc of the world’s manufactured goods.

Despite this slow growth, the industry’s carrying capacity continued to grow, jumping 3.5 per cent to 1.8 billion deadweight tons in 2015 and pushing freight rates down to record lows.

Falling demand from China, low commodity prices, over supply of ships and geopolitical uncertainties in some oil and gas producing countries all add to the current downside risks affecting shipping.

According to the report, the ‘One belt, One Road’ initiative by China, the Japanese initiative of ‘Partnership for Quality Infrastructure’ in Asia and the expanded Panama Canal and Suez Canal, all have the potential to affect seaborne trade, reshape world shipping networks and generate business opportunities.

“The push for ever larger ships is at the root of the industry’s problems, there’s just not enough cargo right now to fill the newly acquired, bigger vessels,” said UNCTAD Secretary-General Mukhisa Kituyi on the launch of the report.

Shipping companies have sought to reduce their operating costs by building and buying ever larger ships. But this may prove costly for developing countries, where transport costs are already higher than in other regions.

Developing countries account for ever larger shares of international shipping. By volume, they accounted for 60pc of goods loaded and 62pc of goods unloaded in 2015.

With the exception of a few Asian countries such as China, most developing country ports lack the infrastructure for bigger ships. So unless they spend heavily on upgrading their ports, developing countries face fewer port calls, less competitive markets and higher shipping costs.

Published in Dawn November 8th, 2016