Vaccinations are key to solving supply chain issues, says UN report
Review of Maritime Transport report finds no end in sight to high freight rates until demand for goods and services rebalances
UN Conference on Trade and Development says it is concerned about container lines expanding into ports, freight forwarding and intermodal transport, saying the oligopolistic nature of the box shipping industry was ‘not a good sign’
GLOBAL vaccinations are the only way out of the supply chain chaos, according to the UN Conference on Trade and Development.
“We see some decline in the global freight rates from last week… but we do not see that there is an end in sight for the overall global shortage of capacity,” said technology and logistics director Shamika Sirimanne at the launched of Unctad’s Review of Maritime Transport report.
“What needs to be done is very simple: it’s the widespread vaccination and getting out of this pandemic is the only way out for all of us, for the whole world.”
Ms Sirimanne said helping vaccinate people in developing countries was a “very, very good investment for those who have excess vaccines”.
About 41% of seafarers were vaccinated.
“This is not acceptable, and this is a big concern if we want to keep supply chains open,” said Ms Sirimanne, adding developing countries were struggling with far higher freight rate rises than western countries, without the same post-pandemic demand surge.
Spot freight rates from China to the US west coast were 348% of the pre-pandemic average, while those to West Africa stood at 412%, South America 612% and South Africa 762%.
Ms Sirimanne said consolidation in the container shipping industry was a concern, both horizontal (fewer shipping companies) and vertical (the remaining companies expanding into other forms of transport, such as port operations, freight forwarding or intermodal transport).
“This we need to keep an eye on because this consolidation and the oligopolistic nature of the markets is not a good sign if we want to see the freight rates coming down when this pandemic situation fades away,” she told a press briefing.
Maritime trade shrunk by 3.8% in last year but was projected to rebound by 4.3% this year, which was better than expected, and with annual growth between 2022-26 of about 2.4% compared with 2.9% over the past two decades.
The recovery of the global economy is threatened by high freight rates, which are likely to continue in the coming months, Unctad analysis shows.
“The current surge in container freight rates, if sustained, could increase global import price levels by 11% and consumer price levels by 1.5% between now and 2023,” it said.
“The current surge in freight rates will have a profound impact on trade and undermine socioeconomic recovery, especially in developing countries, until maritime shipping operations return to normal,” said Rebeca Grynspan, the organisation’s secretary-general.