Existential questions for globalisation remain

Photo Credit: Gary Lam, MarineTraffic.com

Coronavirus vaccines look set to be rolled out gradually in 2021, but has the pandemic already turned back the tide of globalisation?

The unprecedented economic turmoil caused by COVID-19 highlighted the delicate nature of integrated supply chains.   

As the deadly virus spread in the Far East earlier this year, production centres were closed down. And with the dust slowly beginning to settle after a tumultuous 12 months, big changes could still be on the cards. 

The recent UNCTAD Review of Maritime Transport 2020 provided some interesting analysis. In a bid to offer more detailed examination of shipping trends and global trade, based on real shipping movements, MarineTraffic teamed up with UNCTAD authors and analysts to provide data-driven insights. Our high quality AIS data has helped power this important report since 2016.

“For five years now we have been working together with UNCTAD to capture maritime trends and shifts. A key takeaway from this year’s edition of RMT is how timely-generated AIS intelligence converges with information from multiple sources such as official trade volumes and port performance data.”, commented Stellios Stratidakis, MarineTraffic Head of Data.

“A solid proof that MarineTraffic data, based on global AIS coverage, enables visibility and awareness through maritime analytics & KPIs. Such an understanding is crucial especially in times of uncertainty and increased volatility.”, he added.

International maritime trade is projected to recover and expand by 4.8 per cent in 2021

But the report suggested big changes in the industry, particularly around supply chains, are highly likely. 

“In addition to the oversupply of ship capacity, which remains a concern for carriers, the pandemic and its fallout will heighten competitive pressures and drive stakeholders in the maritime transport sector to increasingly tap new business opportunities to ensure relevance, profitability and business continuity,” the report read. 

“Some shipping lines and port operators have been taking greater interest in potential business opportunities that may exist in the supply chain through inland logistics. The aim is to be closer to shippers and emerge as reliable end-to-end logistics service providers.” 

Professor Beata Javorcik, chief economist at the European Bank for Reconstruction and Development, claimed earlier this year that changes to the fabric of global business were inevitable. 

“I think that the trade war [mainly between the US and China], combined with the Coronavirus epidemic, will lead companies to actually take re-shoring seriously,” she said.

“They will re-shore activities that can be automated, because re-shoring brings certainty. You do not have to worry about your national trade policy, and it also gives you an opportunity to diversify your supplier base.”

A study by the Global McKinsey Institute also identified that companies could shift a quarter of their global product sourcing to new countries in the next five years.

Vietnam, Cambodia, Laos and Bangladesh were already establishing solid manufacturing sectors. Rising income levels should now mean that these nations will in turn have a greater appetite for manufactured goods.

“The intra-Asian region appears to be the market attracting increasing attention from the shipping lines,” said Antonella Teodoro, an analyst at the consultancy MDS Transmodal.

“It will mean more vessels stopping at ports within the continent and travelling shorter distances, as opposed to loading up fully in China and setting sail for the west.” 

Richard Portes, professor of economics at London Business School, insists that localised supply chains won’t be a flash in the pan. 

“Once supply chains were disrupted [by coronavirus], people started looking for alternative suppliers at home, even if they were more expensive,” he said. 

“If people find domestic suppliers, they will stick with them…because of those perceived risks.”

The UK’s decision to leave the European Union has prompted even more head scratching from logistics experts. You can read about the problems one major UK port is facing amid issues caused by Christmas, coronavirus and Brexit here.

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