While world trade was in a very complex situation, maritime freight transport companies have been the great beneficiaries.

Solunion flash report on the maritime transport sector

These companies were able to capitalize on the rise in prices and take advantage of a very favorable situation that has allowed them not only to recover, but to record extraordinarily good results.

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Global context: the end of two years of continuous records

The uncertainty that stalked the world with an unprecedented event such as the pandemic only caused a slight adjustment of -2% in the price of containers. After the reactivation of the economy came a stratospheric climb that reached its zenith of €10.377/container in September 2021. The growth was exponential, to the point that it represented a price increase of +618% compared to the minimum marked in May 2020. Demand far exceeded supply, which, along with other factors such as the shortage of containers, bottlenecks in ports, fear of shortages, workers affected by the pandemic, or the collapse in the Suez Canal among others, it created the ideal context for a price increase that was not remembered at least in recent years.

While world trade was in a very complex situation, companies dedicated to the maritime transport of goods have been the great beneficiaries, since they were able to capitalize on the rise in prices and take advantage of a very favorable situation that has allowed them, not only recover, but manage to register extraordinarily good results.

 

Although it is true that in recent years we do not remember a similar situation, it is necessary to analyze the figures with some perspective. For example, with regard to dry bulk cargo sea freight price (Dry Bulk Index), the record reached in 2021 is minuscule when compared to the data recorded during the 2008 financial crisis, which had devastating and prolonged effects on both trade and the global economy. The collapse that occurred at that time was -1.678%, from a price of €11.793 to €663.

 

Although a strong adjustment was expected in fiscal year 2022, the decrease in container prices has been -15%, rather moderate if we compare it with the previous increase. Furthermore, it has remained well above the 2020 average at all times.

During the first half of the year, global growth of +4,1%, China's zero COVID policy and the war in Ukraine, which generated tension and uncertainty on the routes, kept the average price high. During the last quarter of 2022, the The fall has been more abrupt due to expectations of a possible crisis and recession that, although they have managed to move the price away from those record figures of 2021, it is still +20% above that prior to COVID-19. In this new context and after some spectacular years, the main companies in the maritime transport industry expect a reduction in turnover of around -34% by 2023. Along the same lines, margins will narrow at least this year.

Favored by the expected growth of the fleet, around +8%, the process of price normalization continues in 2023. To this we must add the lower level of activity in the global economy, And a greater uncertainty and instability created by current geopolitical tensions and the increase in financing costs. This effect can be seen in the weak start to the year in container trade (in terms of tons), with a decrease of -13% between December 2022 and February 2023; and a drop of -83% to April compared to the maximum price of September 2021. The United Nations Conference on Trade and Development (UNCTAD) estimates, for the period between 2023 and 2027, an average annual growth in world maritime trade of +2,1%, which would represent a slowdown compared to the average of the last three decades.

 

According to Alliance Trade, prices will continue to decline, since supply growth will exceed demand growth in 2023. However, by the end of the year, the positive effects of the full reopening of the economy are expected. China, with expected growth for 2023 of between +5,2% and +5,3%, which could go a long way to driving container volume growth again.

Although the maritime sector is the predominant sector in transport, bringing together 80-90% of the market, it has shown that it has weaknesses and for this reason supply chains have been compromised in recent years. Being a sector in constant evolution, shipping companies continue to look for alternatives, such as reviving the old Silk Road to connect Europe with the Asian giant by land, or optimizing routes and information.

Spanish ports: 2022 a year of recovery and at the level of 2019

Merchandise traffic in Spain is recorded in the 46 ports of general interest, which are managed by 28 port authorities and coordinated State ports. As in the rest of the world, the Spanish port system was not exempt from the impact of the pandemic. According to figures from the Ministry of Transport, the tons of merchandise that passed through these ports decreased by almost -9%, which represented a drop of 49 million tons.

In 2022, a recovery is seen compared to 2020 and 2021, even reaching 2019 levels, with a growth of +3,5% compared to the previous year. According to data from the Ministry of Transport, some 563,3 million tons were registered, 18 million more, and only 1,1 million from the 2019 record. Likewise, it is worth noting that the turnover grew by +11,5% compared to 2021. , reaching the record figure of 1.190 million euros. Although container traffic reached 17,2 million tons (with a drop of -3,2% compared to the previous year, due to there being fewer containers in transit [-6,3%]), it was exceeded including the 2019 record in import-export container traffic, with more than 8,3 million tons.

The 2023 financial year has started irregularly. Port traffic grew by +3,6% in March, which helps to alleviate the weak start to the year, which presents an accumulated negative growth of -1,7%.

Artificial intelligence, one of the biggest challenges in the sector

The development of this technology is in an initial phase. While it is true that there is immense room for growth at a technological level, this will depend on and be subject to the impulse of investment. The improvements and efficiencies will be directed towards the treatment and use of information, Big Data, and the optimization of processes. As stated in the bulletin published by the Association of Spanish Shipowners in January 2023, “data analysis using traditional methods only uses 10% of the available information on the ship.” Therefore, it can be determined that the room for improvement and the potential of the sector is very high.

Artificial intelligence, along with the energy transition, the need for sustainability and climate change, are some of the biggest challenges for the sector and the global economy.