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“On course for a better world” – Kickoff seminar
Danish Shipowners’ Association
9 February 2012, Copenhagen
Maritime transport, sustainable development and
climate change: some issues for consideration
Dr. Regina Asariotis
United Nations Conference on Trade and Development
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Shipping is the lifeblood of world trade
Source: Simon Bennett, ICS, presentation at UNCTAD Ad Hoc Expert Meeting 2011
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Maritime Transport: an engine for development
• Over 80% of the volume of world merchandise trade (and 70% by value) is carried by sea
Developing countries traditional exports: often low value/high volume raw products; increasingly also manufactured goods (Asia).
• Maritime transport provides access to global markets: crucial for all countries - developed and developing - including those that are landlocked
Key factors for developing countries: connectivity, transport costs
• Shipping and ports are key-nodes in global supply-chains and therefore vital for global trade
• Seaborne trade is a derived demand – reflecting developments in global economy and merchandise trade
• Maritime transport faces various emerging challenges ... including those related to energy and climate change
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I. Economic growth and merchandise trade - shipping and
seaborne trade: some recent trends
II. Emerging challenges and some issues to monitor
III. Climate change: implications for maritime transport
IV. Relevant recent work by UNCTAD
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World Advanced economies Emerging and developing economies
World GDP Growth 2007-2013 (Quarter over Quarter, annualised)
Source: IMF, World Economic Outlook Update, January 2012
Commodity Prices: Continued Volatility (2007-2011)
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Food Industrial Materials Energy
Source: IMF, World Economic Outlook Update, January 2012
World export volumes of goods, Jan 2006-Aug 2011
Source: UN/DESA World Economic Situation and Prospects, 2012. Based on CBP Netherlands Bureau for Economic Policy
• Note the collapse in world merchandise export volumes in 2009 and the recovery in 2010
• Emerging economies (green line) are driving the world recovery in trade (grey line);
developed countries (red line) are lagging behind, recovering at a much slower rate
Economic growth and merchandise trade: Key Points
Rapid and strong recovery in world economic output and trade (both merchandise and services) in 2010. However, recovery is fragile and its sustainability threatened
Data indicate that world economy is on the brink of another major downturn: growth in output and merchandise trade has already slowed considerably during 2011 and is expected to slow down further in 2012 and 2013
Economic woes in many developed economies a major factor in the global slowdown. Failure of policymakers to address jobs crisis and prevent escalation of sovereign debt distress and financial sector fragility would send global economy into another recession.
Developing countries and economies in transition expected to continue to stoke engine of world economy, but growth in 2012-2013 expected well below 2010 and 2011. Growth in China and India expected to remain robust.
Commodity prices have increased. They remain highly volatile.
Growth in container, tanker and major dry bulks volumes,
1990-2011 (indices, 1990=100)
Container
Major dry bulks
Tanker
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1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: Review of Maritime Transport 2011. Based on Review of Maritime Transport, various issues;
and on Clarkson Research Services, Shipping Review and Outlook, Spring 2011.
Global Container Trade, 1990-2011 (TEUs and annual % change)
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1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
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0%
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20%
Million TEU (Left) Percentage Change (Right)
Source: Review of Maritime Transport 2011. Based on Drewry Shipping Consultants, Container Market Review and Forecast
2008/09; and Clarkson Research Services, Container Intelligence Monthly, May 2011.
In 2010 container trade volumes experienced an unexpected robust recovery fuelled by a
surge in demand across nearly all trade lanes. Global container trade volumes bounced back
at 12.9 per cent over 2009, among the strongest growth rates in the history of containerization
World fleet by vessel type (million dwt, 1 January 2011)
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Other 31 45 49 58 75 49 92 96
Container 11 20 26 44 64 98 169 184
General cargo 116 106 103 104 101 92 108 109
Dry bulk 186 232 235 262 276 321 457 532
Oil tanker 339 261 246 268 282 336 450 475
1980 1985 1990 1995 2000 2005 2010 2011
Source: UNCTAD Review of Maritime Transport 2011. Compiled by the UNCTAD secretariat on the basis of data supplied by IHS Fairplay.
(Seagoing propelled merchant ships of 100 gross tons and above).
Note: By end 2010, the world order book for new ships had been reduced by about 28 per cent
compared to its pre- 2008 crisis peak. Reduction amounted to 45 % for container ships, 34 % for
tankers, and 18 % for dry bulk carriers.
World seaborne trade by country group, 2010 (% share in tonnage)
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Loaded 34 60 6
Unloaded 43 56 1
Developed economies Developing economies Transition economies
Source: UNCTAD Review of Maritime Transport 2011.
Developing countries continue to account for the main loading and unloading. Dominance of large
emerging DC; concentration of resources/raw materials, which make up the bulk of seaborne trade;
increasingly also manufactured cargo
Asia is by far the most important loading and unloading region (40 % of total goods loaded/ 55% of
total goods unloaded)
Involvement of DCs in Supply of Maritime Transport Services
Maritime Sector/Activity Number of
developing
countries in
the top 10
Market share of
developing
countries in
the top 10, %
Ship building (dwt) 6 76.4
Ship scrapping (dwt) 5 99.0
Insurance services: P&I (dwt) 2 2.4
Ship financing ($) 1 8.7
Ship classification (dwt) 2 10.6
Ship owning (dwt) 4 26.1
Ship registration (dwt) 6 53.2
Port operation: container terminals (TEU) 5 67.4
Ship operation:container ships (TEU) 5 41.5
Ratings (Head count) 8 89.5
Officers (Head count) 6 75.4Source: UNCTAD Review of Maritime Transport 2011.
• Developing countries are expanding their participation in a range of different maritime businesses.
• Strong positions in ship scrapping, registration, and the supply of seafarers
• Growing market shares in capital-intensive/technologically advanced sectors e.g. ship building and owning.
• Ship financing, insurance services and vessel classification: some developing countries have recently been
demonstrating their potential to become major market players.
II. Emerging challenges and some relevant issues to monitor
Uncertainty relating to the world economic and financial situation
«Emerging» global challenges which are interconnected
e.g. energy, environmental sustainability and climate change
Energy: access, security and prices
Climate change: mitigation and adaptation
“Globalisation, climate change, and escalating energy costs are a strategic nightmare for shipping companies and they all have one thing in common – fossil fuels.” Martin Stopford, Clarksons
Other issues, including
Seafaring crisis
Piracy
Supply chain security
Food and water crises
Geopolitical developments including political unrest in certain regions of the world
…
How are maritime freight rates affected by rising oil prices?
• Shipping heavily reliant on fuel oil for propulsion: implications for cc mitigation efforts and transport/trade costs (energy crisis)
• Following peak in oil prices in July 2008, UNCTAD conducted an empirical analysis of the relationship between oil prices and maritime freight rates
Oil Prices and Maritime Freight Rates: An Empirical Investigation (UNCTAD/DTL/TLB/2009/2)
Focus on container transport, but also some dry and wet bulk trades (iron ore, crude oil).
Main findings:
• rising oil prices drive up maritime freight rates in all three trades examined, with estimated elasticities varying, depending on the market segment and the specification
• For container trade, the effect of oil prices on container freight rates is estimated to be larger in periods of sharply rising and more volatile oil prices, compared to periods of low and stable oil prices
• Important implications for maritime transport and trade, in view of continued volatility and expected sustained high levels of oil prices
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III. Climate change: implications for maritime transport
Climate change
• a global challenge and “a defining issue of our era”
• compelling scientific evidence (e.g. IPCC 2007)
• huge potential costs associated with inaction: up to 5-20% of
global GDP, annually (STERN Review 2006)
• a serious development threat, with the Least Developed
Countries (LDCs) and Small Island Developing States
(SIDS) being the hardest hit
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The climate change debate
Two sides of the “climate change coin”: causes - effects
• Mitigation: action directed at addressing causes of CC
(long-term)
• Adaptation: action directed at coping with CC impacts
(short-medium-long term);
• requires understanding of impacts, which vary considerably by type of extreme event, region, environment, sector etc.
Transport:
• much of international debate/policy action focuses on climate change mitigation (i.e. reduction / control of GHG emissions)
• relatively little focus on study of impacts and development of adaptation policies/actions
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UNCTAD: UN system focal point on trade and development
Long tradition in [maritime] transport (e.g. Review of Maritime
Transport)
Since 2008, integration of environmental and climate change
considerations into work on transportation
• UNCTAD Expert Meeting “Maritime Transport and the climate
change challenge” (16-18 Feb. 2009)
• Joint UNECE-UNCTAD Workshop: “Climate change impacts on
international transport networks” (8 Sept. 2010)
• UNCTAD Ad Hoc Expert Meeting “Climate change impacts and
adaptation: a challenge for global ports” (29-30 Sept. 2011)
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CC Mitigation:
the case for CO2 emissions control in shipping
• More than 80% of global trade in goods (volume) carried by sea
• International shipping: ~ 3% of global CO2 emissions from fuel
combustion; most energy efficient mode of transport
However
• Emissions from international shipping are rising - to increase by
factor of 2.4 - 3 by 2050 (IMO, 2nd GHG Study 2009)
• Shipping heavily reliant on fuel oil for propulsion
• Emissions from international shipping not covered by Kyoto Protocol:
negotiations on future emissions regime underway at IMO and
UNFCCC
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Substantive deliberations on CO2 emissions regulation
at IMO: status quo
Technical and operational measures, in particular
• Energy Efficiency Design Index (EEDI) for new ships
• Ship Energy Efficiency Management Plan (SEEMP)
• Energy Efficiency Operational Indicator (EEOI)
Package of measures adopted in July 2011 (by majority)
• amendments to MARPOL, Annex VI
Market-based instruments:
- Issue continues to be highly controversial
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CO2 Emissions control in maritime transport:
industry measures, e.g.
• Slow steaming (N.B. nexus – climate change, energy supply
and economic crisis)
See e.g. H. Haralambides, Erasmus University Rotterdam, On Containing CO2 Emissions in International Ocean Transportation: Some thoughts on the Case of Slow-Steaming (UNECE-UNCTAD workshop presentation)
• Focus on Engines, Propellers, Appendages, Coatings
See e.g P. Gunton, Lloyd’s Register/Fairplay, Controlling GHGs: For Love or Money? (UNCTAD Expert meeting 2009 presentation)
• “Sustainable shipping initiative”
See www.forumforthefuture.org
• “World Ports Climate Initiative”
See e.g. S. Inoue, IAPH, Climate Initiatives of the Worlds Ports, (UNCTAD Expert meeting
2009 presentation)
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Climate change impacts and adaptation:
the case for action
Climate change/extreme events likely to have direct and indirect
impacts on (maritime) transport and related infrastructure, which
have so far received little attention
Sea-level rise, temperature and precipitation changes, more
frequent/intensive storms, floods, etc. predicted to
• affect ports and coastal infrastructure, hinterland transport and
the broader supply-chain
• affect demand for shipping/transport costs/global production
locations
• open new arctic sea-lanes due to polar ice melting
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Climate change impacts and adaptation:
the case for action
Some illustration
US Gulf Coast study
Ports and other infrastructure assets at risk along the US Gulf
coast (US Gulf Coast Study (Savonis 2009))
Flood risk at US Gulf coast
under sea level rise 0-6-1.2 m
(MSL + storm surge). Relative
sea level rise of ~1.2 m (4 feet)
could permanently inundate
more than 2400 miles of roads,
over 70% of the existing port
facilities, 9% of the railway lines
and 3 airports.
US Gulf Coast study
Ports
Roads
In the case of a ~5.4-7 m storm surge, more than 50% of interstate and arterial roads,
98% of port facilities, 33% of railways and 22 airports in the US Gulf coast would be
affected (CCSP, 2008).
US Gulf Coast study
29 Sources: NASA 2010, http://earthobservatory.nasa.gov/NaturalHazards/view.php?id=45177
From: Pascal.Peduzzi, UNEP GRID Europe (2010). UNECE-UNCTAD Workshop presentation.
2010 Pakistan flood: unusually intense monsoon rains
30 Source(s): MapAction; United Nations Office for the Coordination of Humanitarian Affairs (OCHA)
From: Pascal Peduzzi, UNEP GRID Europe (2010). UNECE-UNCTAD Workshop presentation.
31 Fig: Pascal.Peduzzi, UNEP GRID Europe
(2010) UNECE-UNCTAD Workshop
presentation.
32 Figure: Ulrich Ebel, Swiss Re (2010) UNECE-UNCTAD Workshop presentation.
Swiss Re Studies on
Climate Change Effects
33 Figure: Ulrich Ebel, Swiss Re (2010) UNECE-UNCTAD Workshop presentation
Change in annual expected loss from storm surge
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The special case of ports: gateways to global markets
OECD study (Nicholls et. al, 2007)
• Exposure of 136 port megacities to coastal flooding
(population/assets) in 2005
• Estimated asset exposure: USD 3 trillion
Allianz/WWF study (Lenton et.al, 2009) http://knowledge.allianz.com
• Assuming SLR of 0.5 m by 2050 (tipping scenario)…
• Estimated asset exposure in same 136 port megacities:
USD 28 trillion
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Top 20 port cities with highest increase in exposed assets under
tipping scenario (US$ billion) by 2050
Source: Lenton et.al. 2009
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UNCTAD Expert Meeting
“Maritime Transport and the Climate Change Challenge”
Geneva, 16-18 February 2009
• 180 expert delegates from 60 countries, with broad range of backgrounds
• IGOs and NGOs (including IMO, UNFCCC, World Bank, WMO, OECD/ITF, ISO, UNEP, IEA, FAO, UNIDO, WTO, UNDP, UNECE, IOPC)
• Representatives from the international shipping and port industries (including IAPH, ICS, INTERTANKO)
Integrated discussions on
• GHG emissions and climate change mitigation options • Potential impacts on maritime transport supply-chains • Adaptation requirements and broader economic, social and developmental
implications
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Key Points in Chair’s Summary and Conclusions: Mitigation
Time frame real concern:
• According to IEA, unless decisive policy action is taken within 18-24
months (including investment decisions to lock in technology),
“manageable” CO2 atmospheric concentrations (450 ppm CO2
equivalent and 550 ppm CO2 equivalent) cannot be achieved
• GHG emissions from shipping are projected to increase, unless
effective regulatory, technical and operational measures are
negotiated, agreed and implemented without delay
• Negotiations towards regulation of CO2 emissions from international
shipping should be pursued with all due speed
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• So far insufficient attention paid to potential devastating impacts
on transportation systems, in particular, ports – key nodes in the
supply-chain
• Given the potential impacts/implications – maritime transport
should be seen much less as a culprit than as a potential victim
• Increased focus on responding to the challenge important for
the long-term prospects of the maritime transport sector/global
trade
Key Points in Chair’s Summary and Conclusions: Impacts and
adaptation [1]
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Impacts and adaptation [2]
Experts called for further/increased
– appropriately-funded scientific research
– targeted vulnerability studies for ports and coastal transport
infrastructure
– cooperation (scientists, engineers, industry, international
organizations and policy makers)
to ensure that up-to-date information on climate change impacts
and adaptation measures is available, widely disseminated, and is
taken into account by policy makers, transportation planners and
development strategists
Plan and prepare for already-predicted impacts
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Adequate funding paramount for effective adaptation
• Important to explore ways to generate the necessary financial resources
• Consider reinvesting proceeds from financial instruments related to mitigation of maritime transport GHG emissions within the industry for the purpose of effective adaptation, particularly in developing countries
– (N.B. ICS statement at UNCTAD Ad Hoc EM 29.9.2011)
• Important to take advantage of existing technology and develop new technologies. For developing countries, it is crucial to access/benefit from such technology
Impacts and adaptation [3]
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Recent Initiatives by Global Port Industry
IAPH Resolution adopted in May 2009:
to expand work under “World Ports Climate Initiative” to cover
impacts and adaptation
IAPH/AAPA/Stanford University: Global Survey of Ports “Impacts of
Climate Change on Seaports” (2009)
• 81% of respondents consider CC may have serious implications
• 31 % of respondents feel sufficiently informed about risks/costs
IAPH commissioned study on “Seaports and Climate Change - An
Analysis of Adaptation Measures”, 2010”
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Joint UNECE-UNCTAD Workshop
“Climate Change Impacts on International Transport Networks”,
Geneva, 8 September 2010
• Focus of workshop: integrated consideration of impacts and adaptation for
transports systems along international supply-chains: all modes
Follow-up 2011:
• UNECE “Group of Experts on Climate Change impacts and adaptation for
International Transport Networks”
http://www.unece.org/trans/main/wp5/wp5_ge3_02.html
See in particular “Climate Change: an overview of the scientific background and potential impacts
affecting transport infrastructure and networks (Draft Report)”
http://www.unece.org/fileadmin/DAM/trans/doc/2011/wp5/2nd_session_EG_on_Climate_Change_inf-doc-no2.pdf
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UNCTAD Ad Hoc Expert Meeting: “Climate change impacts and
adaptation: a challenge for global ports”
Geneva 29-30 September 2011
Wide range of experts (policy makers, port planners, scientists and
engineers, international organizations, global port and shipping industry
(IAPH, ICS)
share their insights and discuss relevant issues with a view to identifying:
• Vulnerabilities and risks
• Associated adaptation requirements
• Existing best practices, information and data sources
• Issues requiring further study, including data requirements
• Partners and mechanisms for effective collaboration
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Main messages
• Need for more awareness-raising about the complex implications of CC for ports and related transport networks, hinterland connections and (adjacent) cities;
• Bridging the gap between science and policy is crucial. Requires collaboration and dialogue between all stakeholders (scientists/transport industry/insurance sector/financial and lending institutions/policymakers and governments);
• Availability and efficient dissemination of timely, more tailored information and data important;
• Further research and analytical work is needed • targeted case studies, in particular for the purposes of risk assessment
• Identify best practices
• develop guidance, checklists, and other tools in support of adaptation in ports
See further:
“Main outcomes and Summary of Discussions” UNCTAD/DTL/TLB/2011/3
Thank You!
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See www.unctad.org/ttl/legal for information/documentation/presentations
UNCTAD Expert Meeting 2009
Summary of the proceedings (UNCTAD/DTL/TLB/2009/1)
UNECE-UNCTAD Workshop 2010
UNCTAD Ad Hoc Expert Meeting 2011
Main outcomes and Summary of Discussions (UNCTAD/DTL/TLB/2011/3)
UNCTAD Oil Prices and Maritime Freight Rates: An Empirical Investigation (UNCTAD/DTL/TLB/2009/2) www.unctad.org/ttl/legal
Forthcoming: UNCTAD (ed.) Maritime Transport and the Climate Change Challenge, Earthscan, March 2012 (approx. 350 pp).
On UNECE Expert Group on CC Impacts and Adaptation for International Transport Networks, see http://www.unece.org/trans/main/wp5/wp5_ge3_02.html
On developments at IMO see www.imo.org
On vessel efficiency, see also http://www.shippingefficiency.org