Those of us involved in international trade will keep a watchful eye on container activity as a barometer of global economic growth and strength. In July 2022, Drewry’s index for 40ft container prices reached US$7000 but in July this year they had slipped to just US$1537 – a 400% reduction. This is a clear indicator of a decrease in international maritime trade.
The reasons for this are yet to be determined but they are most certainly linked to an economic downturn as a consequence of global inflation and interest rates being at their highest for a decade which has weakened the requirement for shipping. Parts of Asia, as important contributors to global trade, are still looking for a clear new start after the pandemic and the general energy crisis. The real-estate market in that region is also suffering from a serious downturn which might explain the decline of local consumption and investment. We might also be feeling the initial impact of relocation or activity reshoring – only time will tell.
International trade patterns are also driven by geopolitics and global stability. Indeed, the termination of the grain corridor initiative which was not extended after 18 July 2023 will deprive the world of a significant Ukrainian contribution to shipping. Vessels usually involved in the transportation of Ukrainian agricultural products are no longer able to call at Black Sea Ukrainian harbours and the alternative shipping route for exporting products using the River Danube will also be severely reduced following the latest Russian attacks on Reni and Ismael.
The entire Black Sea and Azov Sea areas are likely to suffer from the worsening war between Russia and Ukraine which has now renewed its focus on shipping and will paralyse, to some degree, the entire shipping activity in that region.
Added to this fragmented situation, we continue to face serious and concerning shipping losses including two RORO/ferries in the US and Europe* and the loss of a container vessel** off the Taiwanese coast - all within the same month.
We will consider and discuss all these implications at our Edinburgh conference in September. The annual IUMI conference is well-known for highlighting all types of events that impact marine insurance including specific losses as well as the wider contextual issues of geopolitics and the global economy.
Related topics such as salvage and digitalization will be investigated in the various workshops as will the continuing progress of decarbonisation which was hotly debated at the recent MEPC 80 meeting at IMO in early July.
Indeed our common theme this year “strength and stability in turbulent seas” has never seemed so apt!
I look forward to meeting many of you in Edinburgh.
*July 4 2023 Fire of the Grande Costa d’Avorio in New Jersey US and the fire of the RORO Car carriers Fremantle Highway off Holland coasts on the July 27 2023
** Container vessel Angel listed due to listing problems in Taiwan July 2023