It’s been a chaotic year for many industries – and maritime logistics is no exception. In fact, due to the globalized economy, any changes and disruptions to consumer trends directly impact the maritime shipping and transportation sector. The United Nations Conference on Trade and Development (UNCTAD) estimates that global maritime trade will plunge by 4.1% in 2020 due to COVID-19.
The maritime logistics industry is likely to look a little different as it recovers. Some of the changes that took place during 2020 will have far-reaching implications for climate change, marine technology and innovation, and data collection. Here are the trends we expect to see in the shipping industry in 2021 and beyond.
UNCTAD’s report details just how deep an impact the COVID-19 pandemic had on supply chains, shipping networks, and ports. The 4.1% drop in global maritime trade is the outcome of a multifaceted problem – one that began even before the pandemic with strained trade relations between many nations.
“Amid supply-chain disruptions, demand contractions, and global economic uncertainty caused by the pandemic, the global economy was severely affected by a twin supply and demand shock,” wrote UNCTAD. “These trends unfolded against the backdrop of an already weaker 2019 that saw international maritime trade lose further momentum. Lingering trade tensions and high policy uncertainty undermined growth in global economic output and merchandise trade.”
Ship port calls are one metric that quantifies the slowdown in marine transport during the COVID-19 pandemic. Initial reports from UNCTAD found that in the first 24 weeks of 2020, ship port calls around the globe slid 8.7% as compared to the first 24 weeks of 2019. By week 24, calls were down -20.8% as compared to the same time, 2019. And, fewer calls were the norm across sectors of the maritime shipping industry.
Global ocean logistics slowed down remarkably during the last year – the question remains, can it recover? What long-lasting impact will 2020 have on the ocean logistics industry?
The pandemic has provided an opportunity for the ocean logistics industry to reassess and recalibrate. Here are some of the more permanent changes and issues we expect to see addressed moving forward.
Changes to marine logistics don’t just have commercial implications; they can impact data collection for researchers and scientists. Historically, ships have been an important source of data for marine weather forecasters. The vastness of the oceans means that forecasters must rely on a combination of visual observations made by ship crew and satellite-based proxy measurements. Observations coming from ocean vessels are typically collected from the same shipping routes over and over again, measuring the same regions of the ocean and limiting the data received.
The decrease in the number of ships traveling during 2020 further constricted the amount of data collected for marine weather forecasting. And, compounding the issue, some organizations are assessing whether a long-term shift in shipping routes is needed. Some experts suggest reconfiguring routes for shorter supply chains and faster ocean transit times to lessen the impact of future global emergencies. This would severely impact a marine forecaster’s ability to collect data from different regions of the ocean.
These changes will encourage organizations to invest in networks of marine weather buoys to collect accurate data. By setting up distributed networks of low-cost nodes, marine forecasters can increase the density and redundancy of their data sources, thereby generating more data to feed into models for greater forecasting accuracy. Marine weather buoys provide a more accurate, more reliable data collection method than anecdotal evidence from ships traveling the same regions repetitively.
Decarbonization is the reduction of carbon – and in practice, it means lowering CO₂ emissions as much as possible. In 2018, the UN’s International Maritime Organization to cut the sector’s greenhouse gas emissions by at least half by 2050.
In an effort to meet this goal, the Marine Environment Protection Committee met at the end of 2020 and committed to trying to help cut shipping carbon emissions by 40% – as compared to 2008 levels – by 2030. This commitment was not officially adopted, but is expected to come down in 2021, affecting all ocean freight carriers. Simultaneously, the EU is considering implementing a regional Emissions Trading System (ETS), which would be more rigorous than the MEPC goals.
The bottom line? Maritime shipping and logistics companies must prepare to take climate change policies seriously. These policies will increase costs for ocean transporters – costs of building cleaner ships, scrapping dirty ships, and fines for not meeting CO₂ restrictions. Despite fewer emissions from less ocean transport in 2020, we still have a long way to go in the battle to slow climate change.
The pandemic highlighted just how outdated the procedures and paperwork at ports really is. Measure to reduce cross-contamination led to the speedy adoption of digital forms – and in 2021, Brexit and new EU regulations will make digitization even more important.
“The pandemic is forcing supply chains to problem solve when it comes to safety and efficiency. Shipping is turning to digitalization from customs forms to order confirmations as new trade agreements take effect,” reported FreightWaves. “Making documents digital saves time, decreases risks of spreading COVID-19 face to face, reduces reliance on paper, and saves money.”
Likewise, a new EU regulation that takes effect next year will require hundreds of millions more declarations to be made each year. “Brexit alone could cause declarations to increase by half a million per week,” said one report.
Greater collaboration and data sharing naturally follows digitization; and those ancillary industries, such as marine research and meteorology, that benefit from ship data will have an easier time getting information from open-source sharing and digital platforms.
The IMO is placing increased emphasis on improving conditions for seafarers after the pandemic caused more than 300,000 seafarers to be stranded at sea for months beyond the end of their contracts. It was a preventable and tragic effect of ports and borders closing all over the world. The crisis served to shed a light on the ongoing deplorable conditions on many shipping vessels, and hopefully 2021 will provide the momentum needed to rectify these working conditions.
Trends in the maritime shipping industry have a far-reaching impact on other parts of our lives. Adjusting established shipping routes can change how researchers collect data from different parts of the ocean. Digitizing forms can help break down information silos (as a digital form is more easily shared than a singular paper copy). Fewer ships on the seas can motivate the increased use of more reliable, more efficient networks of buoys. And, decarbonization and human rights are better for everyone.
Learn more about how Sofar Ocean can help deliver safer, more profitable, and more energy efficient shipping routes with our Wayfinder weather routing product for ships.