Sustainable and resilient transport amidst rising uncertainty, disruptions and climate risks

SDG indicators
SDG target 9.1: Develop quality, reliable, sustainable and resilient infrastructure, including regional and transborder infrastructure, to support economic development and human well-being, with a focus on affordable and equitable access for all
SDG indicator 9.1.2: Passenger and freight volumes, by mode of transport (Tier I)

In an ever globalized and interdependent world, transport is the lifeline linking global economies and societies. This sector is a critical enabler of trade, an engine of growth and a driver of social development. While the continuity of freight movements also requires the use of multimodal transport networks including rail, road and inland waterways, maritime transport remains the backbone of globalization, handling over 80 per cent of global trade by volume and more than 70 per cent of its value (UNCTAD, 2019a).

Multimodal transportation enabled by containerisation – a transport technology that is closely associated with globalization and fragmentation of global production – has underpinned regional integration and improved participation in globalized trading systems and value chains (Bernhofen et al., 2013). Apart from the co-dependence between transport, trade and supply chains, maritime transport, including ports and shipping services, constitutes an economic sector in its own right that generates economic and social gains (Rodrigue, 2020; Ministry of Transport, New Zealand Government, 2016).

The rapid growth of demand for transport services exerts pressure on the sector, increasing its exposure to global risks and external disruptive shocks that dislocate transport networks and supply chains. These risks include inward-looking trade policies, geopolitical threats, unsustainable energy use, environmental degradation and climate change (UNCTAD, 2019a) , including pandemics such as COVID-19. Given the strategic role of the sector as a catalyst for growth and development, a full consideration of these risks is required to devise policies that promote sustainable and inclusive long-term growth (UNCTAD, 2018d). While access to affordable, reliable and cost-effective transport systems remains a challenge for many developing countries, especially for LLDCs and SIDS, mainstreaming sustainability and resilience, in particular climate criteria, into transport designs, development plans and management, is an imperative (UNCTAD, 2014a).

Bearing in mind these considerations, SDG target 9.1 seeks to improve infrastructure that supports economic activity and human well-being while promoting sustainability. Specific to transport infrastructure, SDG indicator 9.1.2 measures progress towards sustainable and resilient transportation and measures trends in “passenger and freight transport.” Freight transportation is of direct relevance to UNCTAD’s mandate on transport and trade logistics. This chapter highlights trends in critical maritime transport infrastructure and services that underpin trade, supply chain linkages and economic integration.

Maritime transport amidst heightened uncertainty and a challenging outlook

Maritime transport remains the backbone of globalized trade and manufacturing supply chains as more than four fifths of world merchandise trade volumes are carried by sea. However, according to UNCTAD (2019a), growth in international maritime trade weakened slightly in 2018. Volumes increased at 2.7 per cent, below the historical average of 3.0 per cent from 1970–2017 and the growth of 4.1 per cent registered in 2017. Nonetheless, total volumes reached a milestone in 2018, when they surpassed 11 billion tons for the first time in UNCTAD’s records.

In 2018, main dry bulk commodities accounted for more than 40 per cent of total dry cargo shipments, while containerised trade and other dry cargo accounted for 24 per cent and 35 per cent, respectively. Tanker trade accounted for 29 per cent of total maritime trade volume, down from around 50 per cent nearly four decades earlier. As seen in figure 1, this continues the ongoing trends observed in maritime trade structure since 1980.

Figure 1. Volume of international maritime trade by cargo type
(Billions of tons loaded)

Heightened uncertainty and growing downside risks have put a brake on containerised trade, with volumes expanding in 2018 at a slower rate than in the previous year. Volumes as measured in TEUs increased by 2.6 per cent, down from 6.0 per cent in 2017, bringing the total to 152 million TEUs. This is a dramatic change compared with the double-digit growth rates of the 2000s and less than half the 5.8 per cent average annual growth rate recorded over the past two decades.

As shown in figure 2, developing economies account for nearly two thirds of global maritime trade flows, both in terms of goods loaded and goods unloaded. These economies loaded 58.8 per cent and unloaded 64.5 per cent of the total in 2018. By contrast, developed countries saw their share of both types of traffic decline over time, hovering at around one third in terms of goods loaded and unloaded. The share of economies in transition remains relatively small, with 6.5 per cent of world maritime trade volumes loaded and less than 1.0 per cent unloaded.

Since 2000, the contribution of developing countries to maritime trade has shifted, reflecting their growing role as major exporters of raw materials, as well as large exporters and importers of finished and semi-finished goods. Participation in containerised trade, however, has been concentrated in Asia, notably in China and neighbouring countries. Other developing regions did not contribute equally, reflecting their varying degrees of integration into global value chains and manufacturing networks. This is also shown in figure 2, where the group of developing countries excluding China paints a rather different picture.

Figure 2. Participation of developing countries in global maritime trade
(Percentage share of global maritime trade volumes)

The leading influence of Asia in maritime transport is also highlighted in figure 3. In 2018, this region shipped 41 per cent and received 61 per cent of world maritime cargo . Corresponding figures for the Americas were 22 and 14 per cent, respectively, while 17 per cent of global goods loaded and 19 per cent of global goods unloaded were attributed to European countries. The other regions were responsible for smaller shares of worldwide maritime cargo flows.

Figure 3. International maritime trade by continent, 2018
(Percentage share of global world maritime trade volume)

Logistical bottlenecks and insufficient infrastructure investment undermine maritime transport. They raise costs, extend delays, reduce access, constrain connectivity and hinder effective participation in supply chains and transport networks. Beyond ports, road and rail networks are necessary for door-to-door transport of goods. Infrastructural gaps and bottlenecks affecting inland networks can render transportation costly, especially for LLDCs. Figure 4 features total freight cost estimates (including all modes of transport) for the period 2006 to 2016, indicating that transport costs in LDCs reached 21.2 per cent of the value of imports in the most recent year. These costs amounted to 19.2 and 21.9 per cent of the import value in LLDCs and SIDS, respectively. The equivalent for developed economies was only 10.8 per cent.

Figure 4. Transport and insurance costs of international trade
(Percentage share of value of imports)
Source: UNCTAD (2017).

As trade volumes expand, the importance of port efficiency also increases

To support increased cargo flows and remain competitive, countries must continue to develop new infrastructure and optimise the use of existing networks, while embracing sustainability and resilience. Port performance is a key indicator of trade efficiency that determines connectivity and trade costs. Taking vessel time spent in port as an example of port efficiency metric, every hour of ship-time saved in a port saves money on port infrastructure investments, capital expenditures on ships and inventory holding costs of merchandise. New data show that differences exist across ship segments and sizes, and that longer port turnaround times are prevalent in developing countries and LDCs (UNCTAD, 2020g).

Ports receiving the highest number of calls have shorter turnaround times. The causality goes both ways: if the turnaround time is shorter, a port with the same number of berths can accommodate more port calls. At the same time, countries that trade more and have more port calls will also generate more income to invest in efficient port operations. The dominant role of Asian countries in containerised trade is also observed when looking at port calls (see map 1).

Investment, for instance in mechanised or more efficient loading and unloading operations, is an important factor explaining differences across countries, albeit not the only one. For example, the geographic position of Egypt, Morocco, South Africa and Djibouti along major trade routes explains their leading position as the best-connected countries in Africa.

Map 1. Container ship port calls and time in port, 2018
(Number of arrivals and median number of days in port)
Source: UNCTAD (2020g).
Note: Ships of 1 000 gross tons and above. These figures are based on Automatic Identification System (AIS) data. The variable “median time in port” provide an estimation of overall time in port; however, it should not be considered as a precise measurement of efficiency in port since it does not distinguish between waiting time, berth time, and working and idle time.

Investment requirements in the transport sector remain significant

Existing estimates point to global infrastructure investment needs potentially reaching US$94 trillion in 2015 prices by 2040. A scenario in which current investment trends are maintained implies that only US$79 trillion will be invested, leaving a global infrastructure investment gap of US$15 trillion (Oxford Economics and Global Infrastructure Hub, 2017). This estimate is based on data from seven sectors in 50 countries. Available estimates specific to the transport sector also reveal high investment needs over the coming decades.1

Other studies project global infrastructure investment needs between 2016 and 2030 to reach US$6.3 trillion per year (OECD, 2017). Of these, transport infrastructure expenditure is projected to average US$2.7 trillion annually, with road and rail transport requiring US$2.1 trillion and US$400 billion, respectively, and airports US$200 billion. Cumulative investment needs for the transport sector are expected to reach US$41 trillion, equivalent to 43.1 per cent of total infrastructure investment needs over the period from 2016 to 2030.

The public sector has traditionally played a key role in financing transport infrastructure. However, investment needs are large and public sector financing alone will not be enough to fill the growing financing gap. In many countries, financing transport infrastructure needs is challenged by competition with other high-priority areas for public funds, constrained opportunities for domestic resource mobilization and limited ability to borrow domestically or internationally. Alleviating the persistent transport infrastructure gap and ensuring proper service delivery require further mobilization of domestic resources (public and private), and complementing them with additional sources and arrangements, including foreign direct investment, international debt finance, development aid, as well as private sector participation in the form of public-private partnerships, among others.

In the first half of 2019, investment commitments in the transport sector totalled US$25.8 billion across 78 projects, accounting for more than half of global PPI investments, driven largely by China. This represents an increase of eight per cent compared with the first six months of 2018 and a 34 per cent increase from the first half of the five previous years, on average. In terms of transport sub-sectors, road investments dominated, accounting for more than four-fifths (76 percent) of investments (US$19.5 billion across 62 projects). Of the remaining 16 projects, seven were port projects worth US$2.3 billion, which represent an increase of 16 per cent over the first half of 2018 and an increase of 41 per cent over the first half of the five previous years, on average (World Bank, 2019).

Adapting transport infrastructure in times of climate change

UNCTAD has worked on the implications of climate change for maritime transportation since 2008, with an increasing focus on climate change adaptation and resilience building for seaports and other key coastal transport infrastructure. These are strategic nodes in the network of closely interconnected global supply chains. In keeping with the global momentum of the 2030 Agenda for Sustainable Development, the Paris Agreement on Climate Change and the 2019 Climate Action Summit convened by the Secretary-General of the United Nations, UNCTAD is intensifying its efforts to promote sustainable and climate-resilient freight transport infrastructure and services.2

Transport infrastructure is affected directly and indirectly by climate change, with broader consequences for international trade and the development prospects of the most vulnerable nations.3 Climate-related extreme events and disasters can result in significant economic costs (WMO, 2018). In light of recent climate projections and the urgency to act (IPCC, 2018, 2019), they are considered the top global economic risks, with implications for additional infrastructure investment needs and climate adaptation (World Economic Forum, 2020).

Figure 5 illustrates the potential probability that a disaster leads to damage on infrastructure, based on occurrences in the past. The figure suggests that transport is the sector that is most vulnerable to disasters. On average, transport facilities have a 18-26 per cent probability to be impacted by geophysical, hydrological and meteorological events. Some of these events are expected to increase in frequency and intensity as a result of climate change, with severe consequences for infrastructure. Indeed, a recent study estimated that global damages due to sea-level rise and related extreme events might amount to US$10.8 trillion per year, about 1.8 per cent of global GDP, for a scenario of 1.5°C warming by 2100. For a scenario of 2°C or more, the costs could reach considerably higher levels (Jevrejeva et al., 2018). As current global efforts to contain climate change indicate a large emissions surplus (UNEP, 2019) that exceeds the limits required for the 2°C target, and with global mean sea level reaching its highest value in 2019 (WMO, 2020), climate resilience and adaptation for critical transport infrastructure is a matter of strategic socio-economic importance.

Figure 5. Share of disasters that had an impact on infrastructure, by sector, 2000-2019
(Percentage)
Source: UNCTAD calculations based on data from UNDRR (2020).
Notes: The share shown in this chart is calculated as the number of disasters that damaged infrastructure, divided by the total number of disasters. It is calculated for each infrastructure sector and type of disasters. The category “other” includes multi-hazard events. The source database provides an inventory of disasters and their effects for 155 economies during the period 2000-2019; however, given data gaps and coverage issues, it should be considered as indicative only. For more information on the database, including the classification of disasters, see UNDRR (2020).

Adaptation and resilience measures are essential to reducing the negative impacts of climate change on critical transport infrastructure; they are also key to achieving progress on several SDG targets. In view of the long service life of transport infrastructure and the potentially major consequences of inaction, effective adaptation and resilience requires an early re-thinking of established approaches and practices. However, a recent UNCTAD port-industry survey on climate change impacts and adaptation for ports shows important gaps in data on resilience and preparedness among seaports worldwide (UNCTAD, 2017). Relevant data are urgently needed for effective climate risk assessment and adaptation planning of coastal transport infrastructure, especially for ports in developing countries (UNCTAD, 2011, 2019b). As noted in UNCTAD (2020a), legal and regulatory approaches as well as policies and plans are key in facilitating effective risk and vulnerability assessments and providing a supportive framework for adaptation action. Guidance, standards, best practices, methodologies and other tools in support of adaptation are urgently required, especially for the most vulnerable nations.

Climate change adaptation is a particularly urgent imperative for SIDS (IPCC, 2019; Climate Ambition Support Alliance, 2020). These countries are often particularly exposed and vulnerable to the impacts of climate change while, at the same time, they are highly dependent on coastal transport infrastructure for external trade, food, energy and tourism. SIDS therefore suffer from a “double exposure” to external economic and environmental shocks. Climate-related extreme events, which are expected to increase in frequency and severity, may cause major disruptions to the connectivity of SIDS to international markets with broad ramifications for sectors such as tourism (UNCTAD, 2014b; IPCC, 2018).

UNCTAD has recently conducted vulnerability assessments for eight seaports and coastal airports in two SIDS in the Caribbean, Saint Lucia and Jamaica (UNCTAD, 2018b, 2018c), as part of a technical assistance project on climate change adaptation for coastal transport infrastructure in SIDS (UNCTAD, 2020c). The results of the assessment, which focused on operational disruptions and marine inundation risk under different climate scenarios, suggest severe climate change impacts on coastal transport infrastructure and operations from as early as the 2030s unless further climate change adaptation is undertaken (Monioudi et al., 2018; IPCC, 2018, 2019). Because of SIDS’ heavy reliance on maritime and air transport infrastructure, climate change-driven impacts on transport assets (or transportation demand) have significant impacts on livelihoods, economic, social, and environmental assets, and adversely affect the overall sustainable development prospects of these vulnerable nations.

The potentially severe economic impacts of the global COVID-19 public health crisis might challenge the adaptation efforts of the transport sector in the short term (through a shift in budget allocations resulting in a decrease of infrastructure financing, for example). However, this pandemic underlines the critical importance of preparedness, risk assessment and resiliency building. Lessons learnt could provide renewed impetus to climate risk and vulnerability assessments of critical transport infrastructure and foster long-term planning essential to enhancing resiliency.

While central to development, transport can also have detrimental effects on the environment through air pollution, greenhouse gas emissions, soil contamination, waste, noise, threats to land and water ecosystems and biodiversity, and others. Each mode of transport may entail a different combination of negative impacts on the environment. While maritime transport is the most CO2-efficient mode of freight transport, the large volumes handled by this sector and its projected expansion in the coming decades make climate change efforts of the sector a priority. For instance, according to different scenarios, CO2 emissions from maritime transport are expected to increase by 50-250 per cent in the period to 2050 (International Maritime Organization, 2015; OECD, 2010).

Promoting sustainable transport involves balancing the economic, social and environmental dimensions of the sector. More specifically, it involves transport infrastructure, services and operations that are safe, socially acceptable, universally accessible, reliable, affordable, fuel-efficient, environmentally friendly, low-carbon and climate-resilient (OECD, 2011; UNCTAD, 2018d, 2020c, 2020d).4 Given the potential for a broad range of climate change-induced impacts and the multi-dimensional nature of the sector, collaboration and participation of all relevant stakeholders, including public and private actors and academia, will be crucial to drive more systemic approaches to resiliency building.

Notes

  1. For example, OECD (2012) forecasts global investment needs for airports, ports, rails and energy transportation of US$585 billion per year from 2015 to 2030. PwC and Oxford Economics (2015) estimate that investment requirements in transport infrastructure will increase from US$557 billion in 2014 to US$900 billion in 2025 globally. Finally, Woetzel et al. (2016) project cumulative investment needs in the sector over the period from 2016 to 2030 to amount to US$18.7 trillion.
  2. For additional information, see UNCTAD (2020a, 2020b, 2020d, 2020e).
  3. For some recent studies on these topics, see Asariotis and Benamara (2012); Becker et al. (2013); UNCTAD (2017, 2020a, 2020b) and UNECE (2013, 2019).
  4. For more information on UNCTAD's current work on sustainable freight transport, see UNCTAD (2020f).

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