Paris, 15-16 April 2019

 

Last April 15th, FEPORT Secretary General was invited to participate to a Roundtable organized by ITF regarding Future maritime Flows.

Effective planning for transport infrastructure such as ports and their connections to roads, railways and inland waterways, requires foresight of what possible future maritime trade flows could look like.

While many investments for instance in ports are based on the evolution of maritime capacities such as order book of ships, this option has proven to be somehow risky given the current overcapacity in the container sector which is decoupled from the reality of global trade growth. The density of flows should be driven by the demand for traded goods and the cost to transport these.

  ITF Roundtable on Future maritime Flows 1   

 

The Roundtable enabled participants to discuss these determinants for maritime trade flows with the objective to develop an analytical framework that can be used by countries to evaluate impacts on their transportation systems.

The roundtable was chaired by Mrs Angela Bergantino (University of Bari). Mr Young Tae Kim (Secretary General ITF) gave the opening speech which has been followed by the first session dedicated to the emerging patterns of global economic integration. Mr Francisco Furtado (ITF), Mr Pierre Cariou (Kedge Business School) provided their respective views on ITF Freight model and How will economic globalisation evolve and its meaning for maritime trade.

The demand for traded goods is influenced by a variety of factors, such the level of integration of the global economy, population growth and middle class growth patterns class in developing countries. Transport of fossil fuels, such as oil and coal, represents a large share of maritime transport flows, so diversification of energy supplies and transitions towards renewable energy will have significant impacts on maritime trade flows.

The second session concerned maritime transport costs and trade flows.

Mr Tristan Smith (UCL) who explained how demand for traded goods transported by sea might be sensitive to developments in maritime trade costs. The global sulphur cap that will be applied in 2020 might almost double maritime transport costs and possible future greenhouse gas mitigation measures for the maritime sector would add more costs.

These cost increases could translate in less maritime trade, modal shifts to intercontinental train corridors and reconfiguration of maritime flows, towards routes that are shortest and cheapest.

During session 3, Olaf Merk (ITF) spoke about maritime business strategies and the possible changes they may have on maritime route configurations.

Business strategies of maritime companies also have a direct impact on trade flows: e.g. container shipping has been driven by a model based on economies of scale that has resulted in industry concentration, as highlighted in the ITF report “The Impact of Alliances in Container Shipping”. This could lead to emergence of a few mega-hub ports that attract most of the maritime trade flows.

International freight flows are not simply the outcome of the inter-regional interplay of demand and supply of traded goods. They are to a considerable extent determined by infrastructures such as inter-oceanic channels, by maritime transport costs and business strategies of maritime companies.

The last session of the day was dedicated to infrastructures and global trade flows. The recent expansion of the Suez Canal increases the capacity for the Asia-Europe trade lane, whereas the expansion of the Panama Canal makes it possible for larger ships to cross the canal and has changed the configuration of some trade flows from Asia to the US, resulting in more Asia-US East Coast trade flows.

A true game changer in this respect could be regular commercial navigation along the northern sea route, which becomes increasingly viable due to melting Arctic Ice. This would have profound impacts on existing maritime trade routes, ports and related business activity.

 ITF Roundtable on Future maritime Flows 2             ITF Roundtable on Future maritime Flows 3

Mr Hercules Haralambides (Erasmus University Rotterdam) explained how the Belt and Road Initiative and infrastructure projects that rival the Panama Canal (e.g. Nicaragua Canal) and Malacca Straits (e.g. Cra Canal) and the China Pakistan Economic Corridor may divert current maritime trade flows.

Mr Marten van den Bossche (Ecorys) highlighted the opportunities that the Northern Sea route may represent.

The roundtable was a very interesting exercise and a good and inclusive brainstorming session during which each participant provided its views from the perspective of the industry he or she represented.