Asian maritime connectivity strong amid global upsets

Asian maritime connectivity strong amid global upsets | Daily Tribune

With its vigorous maritime transport sector, Asia is still the region best connected to global shipping networks, its leading position in shipping connectivity boosting trade and powering growth, according to the latest Review of Maritime Transport released by the United Nations.

A report published 22 October 2024 by the UN Conference on Trade and Development (UNCTAD) showed Asian economies retaining top spots on the global Liner Shipping Connectivity Index. China came out on top, followed by the Republic of Korea and Singapore.

Other Asian countries in the top 10 were Malaysia, Japan, and Vietnam, which incidentally has also recorded the highest long-term increase of 199 percent in shipping connectivity since 2006.

The index, first introduced in 2004 by UNCTAD, is based on main components of the maritime transport sector such as ship sizes, deployed capacity, numbers of service providers and weekly calls.

China, Japan, Korea dominance

In shipbuilding, China, Japan and the Republic of Korea continue their dominance, accounting for about 95 percent of global output.

For the first time, China delivered over half of the world’s new ships in 2023. The Philippines came in fourth place in terms of delivery of newly built vessels, followed by Vietnam in fifth place.

However, global trade route disruptions due to geopolitical tensions and impacts of climate change pose challenges to Asia, said the report.

Conflict in the Red Sea has severely affected shipping through the Suez Canal and exacerbated congestion in major ports elsewhere in Asia.

Between March and May 2024, waiting times in Singapore nearly doubled from 24 to 40 hours, while in Port Klang, Malaysia, the number went up from 20 to 26 hours.

Faced with low water levels linked to climate-induced droughts, draft restrictions in the Panama Canal in 2023 led to shipment delays and higher costs.

This has impacted trade routes exporting grains and minor bulk commodities from the Americas to Asia, with a 31 percent increase in sailing distances for completed journeys and a 25 percent decrease in cargo volume.

Engine of merchandise trade

Meanwhile, the report showed that Asia continues to be an engine of merchandise trade, with 80 percent of trade transported by sea.

The report showed that in 2023, main maritime waterways connecting the East and West accounted for at least 36 percent of global containerized trade. These include routes from East Asia to North America, Northern Europe and the Mediterranean.

On the other hand, South-South routes linking the developing world of East and Western Asia, Oceania, Sub-Saharan Africa and Latin America, achieved the highest increase (+9.3 percent) in its volume of global containerized trade in 2023.

Green energy, AI

By sector, technology exports from Asia — most notably green energy and artificial intelligence-related products — are expected to drive further recovery in global merchandise trade.

Iron ore trade will continue to grow, given a firm demand from steel producers, particularly in Asia, the report forecasts.

Global gas trade is also projected to increase, considering expanding infrastructure for the storage and transport of liquefied natural gas, as well as rising demand from Asia and Europe.

The paper also found that Asian hinterland complemented port connectivity. Inland terminals, or dry ports, have the potential to boost regional cooperation and benefit landlocked developing countries.

Their development is also part of the Asian Highway Network and Trans-Asian Railway Network, also known as the Eurasian Landbridge.

The network of dry ports in China and the various inland container depots in India, as the report highlighted, have helped improve trade flows by decentralizing seaport operations such as storage and inspections.

At the same time, the report indicated that global maritime trade grew by 2.4 percent in 2023, recovering from a 2022 contraction, but that the recovery remains fragile.

Key chokepoints

Key chokepoints like the Suez and Panama Canals are increasingly vulnerable to geopolitical tensions, conflicts and climate change.

These disruptions are extending shipping routes, straining supply chains and raising costs, with profound impacts on food security, energy supplies and the global economy, as over 80 percent of world trade volume is carried by sea.

The review called for urgent action to strengthen industry resilience, accelerate decarbonization and support vulnerable economies.

It underscored the need for new infrastructure that is sustainable and resilient, a faster transition to low-carbon shipping, and a crackdown on fraudulent ship registrations to safeguard global trade.