November 13, 2020

UNCTAD Report on Maritime Trade Presents Six Policy Actions to Be Taken in Response to the COVID-19 Pandemic

Until the global spread of the coronavirus disease (COVID-19) pandemic earlier this year, most consumers worldwide never considered how the toilet paper or baking goods they purchase arrive on the shelves of their local grocer. Reports about disrupted supply chains, reduced cargo volumes, and shortage of healthy workers at seaports in distance lands, which normally are found in specialized news sources, started to appear in the mainstream media as the COVID-19 began to impact the global economy. Even if they did not comprehend its specific nuances, people took notice of the role maritime transport has on transporting their home goods to a regional distribution center for ordering via an e-commerce platform. And these consumers quickly began to understand disruptions in the maritime transport industry has a direct impact of obtaining goods they rely on purchasing with ease.

I have long been interested in the logistics industry starting with a tour of a local post office during my childhood where I learned how a letter dropped in the corner letter box is delivered to a friend who lived a few blocks away or my grandparents hundreds of miles from my residence. And I was enthralled by the massive cargo ships docked at the Port of Seattle when I moved to the Pacific Northwest in the 1990s. As a member of board of advisors of TRInternational, Inc., a Seattle-based chemical distributor, which imports many products into the United States via cargo ships, I closely follow the maritime transport industry. Therefore, I took a great interest in reading the Review of Maritime Transport 2020, a recurrent publication prepared by the United Nations Conference on Trade and Development (UNCTAD) secretariat since 1968 with the aim of fostering the transparency of maritime markets and analyzing relevant developments.

Structured around five substantive chapters, the report explains that the "pandemic has brought to the fore the importance of maritime transport as an essential sector for the continued delivery of critical supplies and global trade in time of crisis, during the recovery stage and when resuming normality." What is more, "The global health and economic crisis triggered by the pandemic has upended the landscape for maritime transport and trade and significantly affected growth prospects. UNCTAD projects the volume of international maritime trade to fall by 4.1 percent in 2020. 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." Encouragingly, "UNCTAD projections indicate that maritime trade will recover in 2021 and expand by 4.8 percent."

On the topic of cybersecurity, "Increased cyberattacks in shipping during the COVID-19 crisis were exacerbated by the limited ability of companies to sufficiently protect themselves, including because of travel restrictions, social distancing measures and economic recession." Moreover, "With ships and ports becoming better connected and further integrated into information technology networks, the implementation and strengthening of cybersecurity measures are becoming essential priorities."

New International Maritime Organization (IMO) "resolutions encourage administrations to ensure that cybersecurity risks are appropriately addressed in safety-management systems. Owners who fail to do so are not only exposed to such risks but may have their ships detained by port State control authorities that need to enforce this requirement. Cybersecurity risks are likely to continue to grow significantly as a result of greater reliance on electronic trading and an increasing shift to virtual interactions at all levels. This deepens vulnerabilities across the globe, with a potential to produce crippling effects on critical supply chains and services."

The report also presents "six priority areas for policy action to be taken in response to the COVID-19 pandemic and the persistent challenges facing the maritime transport and trade of developing countries":

1. Support trade so it can effectively sustain growth and development.

"Trade tensions, protectionism, export restrictions, particularly for essential goods in times of crisis, bring economic and social costs. These should, to the extent possible, be avoided. Further, non-tariff measures and other obstacles to trade should be addressed, including by stepping up trade facilitation action and customs automation."

2. Help reshape globalization for sustainability and resilience.

"Disruptions caused by the COVID-19 outbreak have re-ignited the debate on the risks associated with international manufacturing production and extended supply chains. It will be important to carefully assess the varied options when it comes to changes in supply-chain design and outcomes that are aligned with the Sustainable Development Goals and the 2030 Agenda for Sustainable Development. For example, a shortening of supply chains through reshoring or near shoring may reduce transport costs and fuel consumption, but it does not necessarily future-proof supply chains against disruptions that could take place, regardless of the location. Multi-sourcing approaches may guarantee greater resilience than approaches that concentrate production in a single location, whether at home or abroad. The debate on globalization should focus on identifying ways in which unsustainable globalization patterns could be mitigated to generate more value to a wider range of economies."

3. Promote greater technology uptake and digitalization.

"Polices should support a digital transformation that improves the resilience of supply chains and their supporting transportation networks. For maritime transport to play its role in linking global economies and supply chains, it should leverage the crisis by investing in technology and adopting solutions that meet the needs of the supply chains of the future and support resilience efforts. Digitalization efforts should enable enhanced efficiencies, including energy efficiency, and productivity in transport (for example, smart ports and shipping). It should also help countries tap e-commerce capabilities and transport facilitation benefits that boost trade. For more impact, cybersecurity should be strengthened
at all levels."

4. Harness data for monitoring and policy responses.

"The use of fast-evolving data capabilities can support efforts to forecast growth and monitor recovery trends. New sources of data and enhanced possibilities emanating from digitalization provide ample opportunities to analyze and improve policies. The pandemic has highlighted the potential for real-time data on ship movement and port traffic, as well as information on shipping schedules to generate early warning systems for economic growth and seaborne trade."

5. Enable agile and resilient maritime transport systems.

"There is a need to invest in risk management and emergency response preparedness beyond pandemics. Future-proofing the maritime supply chain and risk management require greater visibility of door-to-door transport operations. To do so, it is necessary to formulate plans setting out key actions and protocols to be implemented in response to crises while ensuring business continuity. Special consideration is needed to address seafarers' concerns, most of whom come from developing countries. Collaboration across port States and among different actors within countries remains key to improving crew changeover processes and ensuring standardized procedure and risk management protocols."

6. Maintain the momentum on sustainability, climate-change adaptation and resilience-building.

"Current efforts to deal with carbon emissions from shipping and the ongoing energy transition away from fossil fuels should remain a priority. Governments could direct stimulus packages to support recovery while promoting other priorities such as climate-change mitigation and adaptation action. Thus, policies adopted in the context of a post-pandemic world should support further progress in the shipping industry's transition to greening and sustainability. Meanwhile, sustainability and resilience concerns, such as connectivity among small island developing States and climate-change adaptation, remain key priorities. In these States, critical coastal transport infrastructure is a lifeline for external trade, tourism, and food and energy security. The generation and dissemination of tailored data and information plays an important role in risk assessment, the improvement of connectivity levels, the development of effective adaptation measures, the preparation of targeted studies and effective multidisciplinary and multi-stakeholder collaboration. In addition, progress towards the realization of target 8.1 of the Sustainable Development Goals – sustainable economic growth in the least developed countries – is ever more important to strengthen the resilience of the least developed countries and their ability to cope with future disruptions."

I concur that the "COVID-19 pandemic is a litmus test, not only for globalization but for global solidarity and collaboration as well. The success of the above-mentioned policy measures will depend on effective international collaboration to ensure coordinated policy responses. Coordinated efforts are also necessary for the standardization of data, tracking of port performance and development of protection mechanisms against cybercrime."

Lastly, "In facing the challenges ahead, policymakers should ensure that financial support, technical cooperation and capacity-building are provided to developing countries, in particular the most vulnerable groups of countries, including the least developed countries, landlocked developing countries and small island developing States."

Do you agree with the six policy actions to prepare for a post-pandemic world? Which cybersecurity tools and strategies should companies in the maritime trade industry employ to combat cybercrime?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

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