Because the increases in sea freight rates will not sink. Report

7 July 20213 years ago babelfish

What emerges from the 2021 "Italian Maritime Economy" Report by Srm (Mediterranean Studies and Research)

Maritime transport continues to represent the main "vehicle" for the development of international trade: 90% of goods travel by sea. Shipping and logistics are worth around 12% of global GDP and according to the latest IMF forecasts, world GDP will rebound by 6% in 2021 and by 4.4% in 2022, an increase that reflects expectations of a strengthening. economy fueled by the vaccine campaign over the year and further fiscal support in some large economies. And freight rates still show no signs of slowing down: it is estimated that they will be high in 2021 with a + 22.6% and a readjustment of -9.4% in 2022 and meanwhile the naval gigantism and the domination of the great alliances on strategic routes continue ; orders for ships over 15,000 teus are expected to grow by + 17% by 2023.

This is what emerges in summary from the report "Italian Maritime Economy" by Srm (Mediterranean Studies and Research) presented today in Naples in its eighth annual edition.

Among the data that emerge is that 2020, starting from the second half of the year, has seen an increase in the demand for goods which has partly replaced that for services due to the change in consumption habits due to the pandemic and this has generated a surge in e-commerce, which grew by 30% on 2019. With regard to overall maritime transport, an increase of 4.2% is estimated for 2021 for total volumes greater than 12 billion tons, therefore higher than the pre-Covid-19 levels, and for 2022 a further increase of 3.1%.

Looking at the Mediterranean in particular, the Suez Canal, in the year of the pandemic, showed a remarkable resilience, exceeding one billion tons of goods, with a number of transits equal to almost 19 thousand ships. It has therefore remained a strategic hub for traffic in the Mediterranean, continuing to represent 12% of world traffic and 7-8% of oil traffic.

The Egyptian government has allocated 16.9 billion Egyptian pounds (1.07 billion dollars) of investments for the year 2020-21, aimed at the realization of development projects of the Canal and in May it started new enlargement works of Suez.

It is planned to widen the southern entrance by 40 meters towards the eastern shore of the Sinai and to excavate the seabed to bring it from 20 to 22 meters.

The second lane inaugurated in 2015 will be lengthened by about 10 kilometers, further increasing the capacity of the canal and making it more resilient to accidents such as that of the Ever Given.

These works are expected to be completed within 24 months. In general, congested ports due to infections, super increases in freight rates, lack of empty containers and blank sailing (canceled routes) were the great phenomena that impacted the balance of maritime traffic, especially on the Far East-Mediterranean and Far- East USA.

Freight rates have reached record levels on the main routes and are still showing no signs of slowing down; it is estimated that they will be high in 2021 with + 22.6% and a readjustment of -9.4% in 2022 and meanwhile the naval gigantism and the domination of the great alliances on strategic routes continue; orders for ships over 15,000 teus are expected to grow by + 17% by 2023.

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Extract of the new 2021 Report "Italian Maritime Economy"

1) Covid-19 has considerably affected the balance of world maritime trade. The sea remains the protagonist of commercial exchanges. Asia continues to be the largest player in the container segment.

Maritime transport continues to represent the main "vehicle" for the development of international trade: 90% of goods travel by sea. Shipping and logistics are worth around 12% of global GDP.
According to the latest IMF forecasts, world GDP will rebound by 6% in 2021 and by 4.4% in 2022, an increase that reflects expectations of a strengthening of the economy fueled by the vaccine campaign over the course of the year and by the additional fiscal support in some large economies.
Starting from the second half of the year, 2020 was characterized by an increase in demand for goods which partly replaced that for services due to the change in consumption habits due to the pandemic. This generated a surge in e-commerce that grew by 30% over 2019.
The reopening of the economies and the recovery in demand remain the key driver for the growth of world trade in 2021 with a forecast of 8.4% and again of 6.5% in 2022.
With regard to overall maritime transport, an increase of 4.2% is estimated for 2021 for overall volumes greater than 12 billion tons, thus higher than the pre-Covid-19 levels, and for 2022 a further increase of 3.1%.
The container segment, which represents the preferred mode of transport for the global trade in goods, has experienced constant growth since July 2020 with the recovery of demand especially from Europe and North America, which has led it to close the 2020 with a reduction of just 1.1%. Growth of 8.7% is estimated for 2021 and 4.7% for 2022.
Extending the forecasts to 2025, container handling in ports worldwide is expected to grow at an average annual rate of 4.8% to over 1 billion TEU by 2025. (worldwide Europe + 3.9%, Africa + 4.9%, Far East + 5.3%, Middle East + 4% and North America + 3.6%)
The presence of 14 Asian ports in the world Top 20 confirms once again the importance of this continent in the containerized transport segment, with a share of 54.5%.

2) The role of the Mediterranean and the Suez Canal is still important and shows considerable resilience.

The Mediterranean still represents a privileged transit route for containerized traffic, concentrating 27% of the approximately 500 global scheduled services by ship.
The Suez Canal, in the year of the pandemic, showed a remarkable resilience, exceeding one billion tons of goods and totaling a number of transits equal to 18,829 ships. Even in a complex economic moment, Suez has therefore remained a strategic hub for trade in the Mediterranean, continuing to
represent 12% of world traffic and 7-8% of oil traffic.
The Egyptian government has allocated 16.9 billion Egyptian pounds (1.07 billion $) of investments for the year 2020-21, aimed at the realization of development projects of the Canal.
Egypt began new enlargement works in Suez in May. It is planned to widen the southern entrance by 40 meters towards the eastern shore of the Sinai and to excavate the seabed to bring it from 20 to 22 meters. The second lane inaugurated in 2015 will be lengthened by about 10 kilometers, further increasing the capacity of the canal and making it more resilient to accidents such as that of the Ever Given. These works are expected to be completed within 24 months.

3) The surge in freight rates, directly and indirectly generated by the pandemic, shows no signs of slowing down

Another phenomenon that characterized the period of Covid-19 was the congestion of ports, in particular the North American ones, due on the one hand to the increase in volumes of goods due to the increase in demand, and on the other to the lower availability of manpower. port due to infections and more rigid security protocols and therefore longer times.
The recent paralysis of the Chinese terminal of Yantian in Shenzhen, one of the most important in the country, due to a resumption of Covid cases, has accentuated the problem of congestion also in the Far East. There was a peak of about 150 delayed ships and about seventy stopped waiting to enter the port to be “processed” with consequent inconvenience for all logistic and goods delivery chains.
During the Covid-19 period there was a high number of blank sailing – routes canceled due to lack of cargo – which involved all the main strategic container routes.
The phenomenon reached 2.72 million TEU at the end of May, equal to 11.6% of the total hold capacity. SRM estimates 7 million TEUs lost globally for 2020.
On major routes, including the Mediterranean (Asia-Europe), major alliances between carriers dominate even if in 2020 there were interesting variations in activity. Overall, the weekly capacity along Asia-Europe in June 2020 is well below the pre-Covid levels of 17.1% for an average weekly capacity value of approximately 361 thousand TEU.
The capacity of THE Alliance and 2M (Maersk, MSC) decreased on the Asia-Europe route by 22.7% and 18% respectively, largely due to the suspension of services. The OCEAN Alliance (with the Chinese COSCO and the French CMA CGM), on the other hand, did not interrupt the services along the route but chose for the most part to limit individual capacity with smaller vessels (-12.4% June 2020 / June 2019).

Interesting data shows that, according to estimates, the global capacity of container terminals is expected to grow at an average annual rate of + 2.1% over the next five years, equal to 25 million TEU more per year. This is well below the capacity growth seen in the last decade, when the average annual increase was over 40 million TEU per year. (at global level, Europe + 2.3%, Africa + 3.3%, Far East + 3.9%, Middle East + 4.5% and North America + 2.3%). This probably indicates that large terminal operators have planned fewer investments in expansion.

4) The presence of the Great Shipping Container Alliances is still dominant.

On major routes, including the Mediterranean (Asia-Europe), major alliances between carriers dominate. Overall, the weekly capacity along Asia-Europe in January 2021 is 10% higher than in the same period in 2020.
The capacity of THE Alliance and OCEAN Alliance (with Chinese COSCO and French CMA CGM) on the Asia-Europe route increased by 35% and 7% respectively. On the other hand, 2M (Maersk, MSC) fell by just 1%.
In 2020, carriers achieved a record operating profit of $ 27 billion. Estimates for 2021 are for an important growth of 35 billion dollars and for 2022 of 25 billion dollars.
The containership orderbook is also on a high level. As of May 2021, 474 new ships are on order (out of an existing fleet of 5,482 units) for 38.9 million GT (equal to 15% of the existing 255.8 million GT).
The trend towards gigantism is confirmed: an increase in ships with a capacity exceeding 15 thousand TEU is estimated, equal to 14%, 9% and 17% in 2021-2022 and 2023.

5) The uncertainty in the operations of many global value chains due to the pandemic can generate a push towards regionalization of supply chains, which accelerates reshoring and near-shoring to advanced economies and to neighboring countries. This can represent a great opportunity for the Mediterranean.

The incident of the mega container ship Ever Given stranded in the Suez Canal, which paralyzed ship traffic for almost a week, and the partial interruption of the activities of the Yantian terminal, which affects world container traffic, have clearly shown the vulnerability of international trade dynamics and the weaknesses of global supply chains.
For the stop at the Suez transits, a daily loss of $ 9.6 billion is estimated; in detail, $ 4.5 billion on the southward route from the Mediterranean to the Indian Ocean and $ 5.1 billion in the opposite direction.
The continued development and implementation of regional trade agreements (e.g. NAFTA, RCEP and AfCFTA) and ongoing trade tensions between major economies could also contribute to changes in the production patterns of global value chains. Additionally, persistent container shortages and rising freight rates could provide further impetus to reshoring and nearshoring trends.
During the period of the pandemic there was a significant increase in rail transport on the China-Europe route and vice versa. According to the China State Railway Group, in the first quarter of 2021, the number of freight trains reached a record 3,345 trains that transported 317,000 TEUs, with a growth of 79% over the same period of 2020. According to the Chinese railways, the rail transport played a decisive role in stabilizing the international logistics chain interrupted by the pandemic.
The redefinition of some supply chains on a regional scale will bring some supply chains back to Europe and this may further favor the growth of short sea shipping for which the Mediterranean already has a leading position in Europe.

6) The stable Italian ports, the maritime import export always relevant for our country. Shortsea Italian excellence.

For the Italian ports, the Report confirms an impact on commercial traffic equal to -10%, but containerized goods, in contrast to the trend, showed a + 3% mainly due to the performance of Gioia Tauro.
In Italy the international component of maritime transport is always relevant. In 2020 the value of Italy's seaborne trade was equal to € 206.3 billion, recording a -17% on the previous year. Of these € 99.8 billion are in imports (-23%) and 106.5 in exports (-10%).
In the first quarter of 2021, import export by sea recorded an increase of 3%.
The sea absorbs 33% of Italian trade while road transport still absorbs 52% of freight traffic.
China is our main supplier country: with € 20.5 billion it represents 21% of all Italian imports by sea. The first customer country for maritime mode is the USA which with € 27.2 billion concentrates 26% of our exports.
Ro-Ro is a valuable element of our traffic. In 2020 it recorded 105 million tons, recording a -7% on 2019. 35% of the traffic of rolling stock in transit in Italian ports is international, comes from or is directed abroad.
A study carried out by SRM has shown that for every ton handled in ports by Ro-Ro 44 kg of CO2 are eliminated.
Liquid bulk for Italy, an important proxy for the energy component of ports, represents the most significant product category in terms of volumes and therefore strategic (significant revenues for port activities). In 2020, with a clear prevalence of imports, approximately 157 million tons were handled, mainly related to the demand for refining petroleum products and the energy demand to be met.
The top 5 Italian Energy Ports (Trieste, Augusta, Cagliari, Milazzo and Genoa) represent 69% of the entire national liquid traffic and Trieste, with 37.6 million tons, is confirmed as the Italian port handling the highest volumes. Followed by Augusta and Cagliari.
Other types of traffic are substantially stable; on containers, our country still fails to give the boost to the figure that sees us "anchored" at around 10 million TEU for years now. However, 2020 marked a change because, due to the excellent performance of Gioia Tauro (+ 26.6% on 2019), the transshipment trend offset the reduction recorded by gateway ports (-8.3%).
Italy always leader in Short Sea Shipping in the Mediterranean. Italy is the first country in the EU28 for the transport of goods in Short Sea Shipping mode in the Mediterranean, with 244 million tons of goods transported (market share 37%).
Expectations related to the PNRR which foresees, in favor of ports, logistics and maritime transport over 3.8 billion for interventions for the modernization and enhancement of ports, the realization of the National Cold Ironing Plan which allows ships to stop at port eliminating polluting emissions, energy efficiency (green ports), and to facilitate intermodality with the construction of the last railway mile in the ports of Venice, Ancona, Civitavecchia, Naples, Salerno.

7) The ports of the South are confirmed as a strategic resource for the country

The ports of the South with 207 million tons of goods handled in 2020 account for 47% of the total of Italian traffic.
The Mezzogiorno showed greater resilience during the pandemic; the decline in southern ports was -3.4% against approximately -10% in Italy.
In their international relations (importexport), companies in the South use the maritime route more intensively than the country. In fact, 57% of Southern trade takes place by sea (for a value of approximately 42 billion euros) against 33% of the Italian figure.
Specifically in the shipping activity that embraces the supply chain from shipbuilding to transport to related services, the South has the highest number of active companies, registering over 4,400 companies in the sector (North West: 2,396; North East: 2,515; Center: 2,877).
The weight of the ports of the South is also significant in the “Energy” sector (crude and refined oil), representing 47% of the country's oil supplies and exports by sea and being the terminal of important pipelines from North Africa and Asia.
The South has an important presence in the Ro-Ro sector and motorways of the sea (it accounts for 53% of the total Italy), a sector that has been able to resist the pandemic well as it is also responsible for the transport of heavy vehicles that have continued to circulate.
In a key to the great relaunch of the economy of the sea in the South, the candidacy of Naples as the seat of the Regional Center of the Mediterranean of EMSA, the European Maritime Safety Agency, is strategic

8) The SEZs as a development lever with the fundamental task of putting the manufacturing industry of a territory into a system with the port / ports of reference. The new government has given a strong impulse to the SEZs with the new decree 77/2021 on simplification; new powers on commissioners and provisions on single authorization have been introduced.

In addition, the PNRR provides for Interventions for the Special Economic Zones (SEZ) with the allocation of 630 million euros.

It is mentioned that the infrastructural investments proposed for the financing of the PNRR aim at ensuring an adequate development of the connections of the SEZ areas with the national transport network, and in particular with the Trans European networks (TEN-T), in order to make the implementation of the SEZs.

As part of the strategic development plans of the eight SEZs involved, various infrastructural projects are envisaged:

“Last mile” connection: creating effective railway connections between the industrial areas and the SNIT and TEN-T network, which allow production districts to reduce time and costs in logistics;
Primary urbanization: in some production areas the regional tables have agreements with economic operators ready to invest, which however make the provision of infrastructures in the areas identified as a condition, as well as in other regulatory instruments (municipal regulatory plans, regional landscape plans, etc. );
Resilient and efficient transport networks with local interventions aimed at strengthening the safety level of the serving works (often outdated), in relation to access to the main structures (ports, airports, production areas) and in any case according to the rules dictated by current technical and dedicated guidelines.

This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/smartcity/sintesi-rapporto-italian-maritime-economy/ on Wed, 07 Jul 2021 13:47:30 +0000.