IUMI 2010 ZURICH

12 TO 15 SEPTEMBER

IUMI 2010 ZURICH

12 – 15 September

Shipping and global trade:

A review of major developments

Hassiba BenamaraUNCTAD

212 TO 15 SEPTEMBER

CONTENTS

I. Macro factors

Economic growth and merchandise trade

II. Shipping and seaborne trade

Demand: seaborne trade

Supply: fleet developments

Freight rates

III.Emerging challenges and some relevant issues to monitor

Environment

Energy

Other

312 TO 15 SEPTEMBER

I. Economic growth and merchandise trade

412 TO 15 SEPTEMBER

UNCTAD and WTO, 2010

The first and deepest contraction (-1.9%)…

… in global output since the 1930s

World GDP (real), 1971-2010World GDP (real), 1971-2010

512 TO 15 SEPTEMBER

Broad-based and varied speed

-10.0

-5.0

0.0

5.0

10.0

15.0

2004 2005 2006 2007 2008 2009 2010

United States

EU

Japan

India

China

South Africa

Brazil

RussianFederation

World GDP (% annual growth), 2004-2010World GDP (% annual growth), 2004-2010

UNCTAD, 2010

612 TO 15 SEPTEMBER

The “Great Trade Collapse”

GDP

Exports

-15

-10

-5

0

5

10

15

1971 72 73 74 75 76 77 78 79

1980 81 82 83 84 85 86 87 88 89

1990 91 92 93 94 95 96 97 98 99

2000 01 02 03 04 05 06 07 08 09

2010

per cent annual growth

World GDP and trade (real), 1971-2010World GDP and trade (real), 1971-2010

UNCTAD and WTO, 2010

712 TO 15 SEPTEMBER

Adverse trade shocks across regions

-30% -25% -20% -15% -10% -5% 0%

WO RL D

N orth A merica

Europ ean Un ion (27)

D eve lop ed As ia (Japan & Israel )

Africa

D eve lop ing Am erica

D eve lop ing As ia

Western As ia

C hin a

Trans itio n Eco nom ies

Im po rts

Exports

UNCTAD , 2010

World merchandise trade (real), 2009World merchandise trade (real), 2009

812 TO 15 SEPTEMBER

An unprecedented trade contraction

Merchandise exports dropped about 7 times more rapidly than global GDP (elasticity ≈ 2 in 60s and 70s and 3.4 in 90s). UNCTAD estimate for 1971-2010 ≈ 2.5.

Demand shock and synchronized drop.

Multiplier effect: Product composition of the fall in demand (e.g.

consumer goods and durables, higher income elasticity).

Trade in goods drops faster than trade in services which account for a larger share of GDP.

Globalised production and increased trade in parts and components.

Deepening and widening of global supply chains.Limited trade finance (in addition to demand shock).

912 TO 15 SEPTEMBER

BUT…… there are signs of recovery

in economic indicators…

1012 TO 15 SEPTEMBER

Business confidence is improving…

60

70

80

90

100

110

120

2007m

1

2007m

3

2007m

5

2007m

7

2007m

9

2007m

11

2008m

1

2008m

3

2008m

5

2008m

7

2008m

9

2008m

11

2009m

1

2009m

3

2009m

5

2009m

7

2009m

9

2009m

11

2010m

1

2010m

3

2010m

5

World Advanced economies Emerging economies

IMF, WEO Update, July 2010

Manufacturing Purchasing Managers’ Index, 2007-2010Manufacturing Purchasing Managers’ Index, 2007-2010


…so does consumer confidence…

90

100

110

120

130

140

150

160

170

2007

m1

2007

m3

2007

m5

2007

m7

2007

m9

2007

m11

2008

m1

2008

m3

2008

m5

2008

m7

2008

m9

2008

m11

2009

m1

2009

m3

2009

m5

2009

m7

2009

m9

2009

m11

2010

m1

2010

m3



Retail sales, 2007-2010Retail sales, 2007-2010


…and industrial production

80

85

90

95

100

105

110

115

120

125

130

2007

m1

2007

m2

2007

m3

2007

m4

2007

m5

2007

m6

2007

m7

2007

m8

2007

m9

2007

m10

2007

m11

2007

m12

2008

m1

2008

m2

2008

m3

2008

m4

2008

m5

2008

m6

2008

m7

2008

m8

2008

m9

2008

m10

2008

m11

2008

m12

2009

m1

2009

m2

2009

m3

2009

m4

2009

m5

2009

m6

2009

m7

2009

m8

2009

m9

2009

m10

2009

m11

2009

m12

2010

m1

2010

m2

2010

m3

2010

m4


Industrial production, 2007-2010Industrial production, 2007-2010



GDP growth turned positive in Q2-2009…

-8

-6

-4

-2

0

2

4

6

8

20

07

Q1

20

07

Q2

20

07

Q3

20

07

Q4

20

08

Q1

20

08

Q2

20

08

Q3

20

08

Q4

20

09

Q1

20

09

Q2

20

09

Q3

20

09

Q4

20

10

Q1


World GDP (% annual growth), 2007-2010 World GDP (% annual growth), 2007-2010

…UNCTAD expects GDP to grow by 3.5% in 2010


World exports forecast to grow…8

09

01

00

11

01

20

13

01

40

15

0

2007m

1

2007m

3

2007m

5

2007m

7

2007m

9

2007m

11

2008m

1

2008m

3

2008m

5

2008m

7

2008m

9

2008m

11

2009m

1

2009m

3

2009m

5

2009m

7

2009m

9

2009m

11

2010m

1

2010m

3


Merchandise exports, 2007-2010Merchandise exports, 2007-2010


…by + 9.5% in 2010, 7.5% in developed economies;

11% ROW (developing and EIT)


Commodity prices are also rising

Commodity price indices (actual and forecast, 2000=100), 2000-Commodity price indices (actual and forecast, 2000=100), 2000-20112011

World Bank, 2010


Longer term outlook and a new global design

Major industrialized countries– Twenty years up to 2009: +2.2%– Next twenty years forecast: +1.8%

Major developing countries– Twenty years up to 2009: +6.3%– Next twenty years forecast: +5.9%

World average– Twenty years up to 2009: +2.9%– Next twenty years forecast: +3.5%

World exports (tons):- Expected to double in the next 20 years.

Source: IHS-Fairplay, as presented to IAME 2010, Lisbon, July 2010


II. Shipping and seaborne trade


Unsheltered from shocks in the wider economy…

Year Oil Main bulks a Other dry cargo Total

(all cargoes)

1970 1 442 448 676 2 566

1980 1 871 796 1 037 3 704

1990 1 755 968 1 285 4 008

2000 2 163 1 288 2 533 5 984

2006 2 698 1 849 3 135 7 682

2007 2 747 1 972 3 265 7 983

2008 2 732 2 079 3 399 8 210

2009b 2 649 2 102 3 092 7 843

UNCTAD RMT, 2010

-3%+1.1%

-9% -4.5%

World seaborne trade (tons), 1970-2009World seaborne trade (tons), 1970-2009

…seaborne trade contracted (-4.5%) in 2009


All shipping segments negatively affected…

UNCTAD, RMT 2010; Clarkson Shipping Review (spring 2010), Dry Bulk Outlook, August, 2010, and Container Intelligence Monthly, August, 2010

2009 2010f

Iron ore 8% 6%Coal 1% 9%Grain -2% 2%Bauxite and Alumina/Phosphate Rock -27% 18%Major dry bulk 1% 7%

Minor dry bulks -13% 9%

Other dry cargo -9% 6%

of which container -9% 11%

Oil -3% 3%Total seaborne trade (tons) -4.5% 5.2%

Seaborne trade (% change), per cargo type, 2009-2010Seaborne trade (% change), per cargo type, 2009-2010

…but major dry bulk cargo held strong; China factor


2009, a dramatic year in the history of container shipping (-9.4%)

-

20

40

60

80

100

120

140

160

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Mil

lion

TE

Us

-15

-10

-5

-

5

10

15

20

Per

cent

age

UNCTAD, based on Clarkson Research Services and Drewry Consultants

Global container trade, 1990-2010Global container trade, 1990-2010


Fleet developments


Growth in ship supply capacity continues…

0

200

400

600

800

1,000

1,200

1,400

Other 31 45 49 58 75 49 92

Container 11 20 26 44 64 98 169

General cargo 116 106 103 104 101 92 108

Dry bulk 186 232 235 262 276 321 457

Oil Tanker 339 261 246 268 282 336 450

1980 1985 1990 1995 2000 2005 2010

World fleet by vessel type in million dwt, 1980-2010World fleet by vessel type in million dwt, 1980-2010

…1.27 billion dwt at the beginning of 2010, 7% increase

UNCTAD, based on IHS- Fairplay data


Record new deliveries and an impressive orderbook

Oil tankers

Dry bulk

General cargo

Container ships

0

50 000

100 000

150 000

200 000

250 000

300 000

12 /

2000

03 /

2001

06 /

2001

09 /

2001

12 /

2001

03 /

2002

06 /

2002

09 /

2002

12 /

2002

03 /

2003

06 /

2003

09 /

2003

12 /

2003

03 /

2004

06 /

2004

09 /

2004

12 /

2004

03 /

2005

06 /

2005

09 /

2005

12 /

2005

03 /

2006

06 /

2006

09 /

2006

12 /

2006

03 /

2007

06 /

2007

09 /

2007

12 /

2007

03 /

2008

06 /

2008

09 /

2008

12 /

2008

03 /

2009

06 /

2009

09 /

2009

12 /

2009

World tonnage on order, 2000-2010 (000’ dwt)World tonnage on order, 2000-2010 (000’ dwt)

UNCTAD, based on IHS- Fairplay data


Wider supply and demand imbalance…

-10.0

-5.0

0.0

5.0

10.0

15.0

Demand 10.7 2.4 10.5 11.6 13.4 10.6 11.2 11.4 4.3 -9.1 11.1

Supply 7.8 8.5 8.0 8.0 8.0 10.5 13.6 11.8 10.8 5.1 8.8

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010a

UNCTAD, based on Clarkson Container Intelligence Monthly

Supply and demand in container shipping, 2000-2010Supply and demand in container shipping, 2000-2010

…as illustrated by container shipping


Freight rates


D/S determine freight rates…

The year 2009 was a bleak year for freight rates in all

market segments.

By the end of 2009, rates in all sectors have

recovered from their earlier lows albeit still

significantly below their pre-crisis levels.

Freight rates for 2010 were volatile and future

prospects remain uncertain.


Baltic Tanker Indices, 2005-2010Baltic Tanker Indices, 2005-2010

0

500

1,000

1,500

2,000

2,500

Jan

-05

Mar-

05

May-0

5

Ju

l-05

Sep

-05

No

v-0

5

Jan

-06

Mar-

06

May-0

6

Ju

l-06

Sep

-06

No

v-0

6

Jan

-07

Mar-

07

May-0

7

Ju

l-07

Sep

-07

No

v-0

7

Jan

-08

Mar-

08

May-0

8

Ju

l-08

Sep

-08

No

v-0

8

Jan

-09

Mar-

09

May-0

9

Ju

l-09

Sep

-09

No

v-0

9

Jan

-10

Mar-

10

May-1

0

Dirty Index Clean Index

UNCTAD , based on Lloyd’s Shipping Economist data

…tanker rates fell with falling oil demand


Dry cargo freight indices, 2004-2010Dry cargo freight indices, 2004-2010

UNCTAD, based on ISL-Shipping Statistics and Market Review

0

500

1000

1500

2000

2500

3000

Jan

-04

Mar

-04

May

-04

Jul-

04

Sep

-04

No

v-04

Jan

-05

Mar

-05

May

-05

Jul-

05

Sep

-05

No

v-05

Jan

-06

Mar

-06

May

-06

Jul-

06

Sep

-06

No

v-06

Jan

-07

Mar

-07

May

-07

Jul-

07

Sep

-07

No

v-07

Jan

-08

Mar

-08

May

-08

Jul-

08

Sep

-08

No

v-08

Jan

-09

Mar

-09

May

-09

Jul-

09

Sep

-09

No

v-09

Jan

-10

Mar

-10

Tramp Trip

…dry bulk rates supported by demand from China…


Container freight rates, 2005-2009Container freight rates, 2005-2009

0

500

1,000

1,500

2,000

2,500

q12005

q22005

q32005

q42005

q12006

q22006

q32006

q42006

q12007

q22007

q32007

q42007

q12008

q22008

q32008

q42008

q12009

q22009

q32009

q42009

Asia–USA USA–Asia Europe–Asia Asia–Europe USA–Europe Europe–USA

UNCTAD, based on Containerisation International data

… container rates supported by a series of counter-measures


Summary of key points (1)

2009, a record in history.

Prospects are improving; recovery varying in speed, driven by emerging developing economies (e.g. Asia).

Various forecasts for 2010/2011 (UNCTAD, IMF, WB, IHS-Fairplay, …); all positive.

World merchandise trade is forecast to grow in 2010 and 2011(e.g. WTO and World Bank).

World seaborne trade also forecast to grow in 2010 and 2011.


BUT…… the outlook remains fragile in view of various downside

risks…


Summary of key points (2)

Sustainability of recovery, strength and shape (V, U or W)?

Public debts

Unemployment and bank lending

Stimulus packages (duration/end)

Is observed trade recovery driven by new demand?

Supply-side pressures

Known and unknown crises


III. Emerging challenges and issues to monitor

Energy: access, security and pricesEnergy: access, security and prices

Climate change: mitigation and adaptationClimate change: mitigation and adaptation

Seafaring crisis?

Supply chain security and piracy

Other global crises: e.g. food, water, financial…

Geopolitics

Other ?


Focus on two emerging global challenges

Climate change & energy: interconnectedClimate change & energy: interconnected Climate change mitigation action has implications for ship

design, engines, fuel systems, operations, services, management, value, etc.

Indirect implications through changes in demand for shipping services. E.g. climate induced changes in trade structure, flows and patterns through impacts on sectors such as energy production and consumption, agriculture and food products, demography and human settlement, etc.

Climate change mitigation and adaptation require energy. However, there are signs of a looming energy crisis. Shipping is heavily reliant on oil for propulsion and not yet in a position to effectively and widely adopt substitutes.


Conclusion?


…and publications by UNCTAD, including on oil prices and maritime freight rates,

maritime transport and the climate change challenge, as well as supply chain

security are available at:

UNCTAD Trade Logistics Branchwww.unctad.org/ttl/legal

UNCTAD’s annual Review of Maritime Transport and quarterly Transport Newsletter are available at: www.unctad.org/transportnews

Addition information…

IUMI 2010 ZURICH

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