The geography of international trade has fundamentally changed over the last decades, reflecting wide-ranging factors. It has also been impacted by improvements in transport services, notably maritime shipping, which moves about 80% of global trade volume. The volume of seaborne trade per person has doubled during the last five decades, and UNCTAD data on port throughput shows how developing countries have increased and shifted their participation during this period.

Looking at logistics services, we observe that expenditures on inventory holding costs have gone down over the decades, while payments for transport services have increased, in line with more Just-in-Time deliveries and improved logistics and trade facilitation services.

These trends, however, may be changing, and businesses and policymakers need to reconsider some basic assumptions about ever-improving trade logistics services. The Trade and Development Commission will discuss if and how the ongoing supply chain crisis – including high freight rates, congestion and disruptions in shipping services – may impact the future of the geography of trade, maritime transport and supply chains.

Extract: The highest intraregional freight costs are those within Africa, reflecting the region’s geography and infrastructure development. Moving cargo out of Asia is two to three times more costly than the return journey, with often empty containers. Contract freight rates, which tend to be negotiated at the beginning of the calendar year, increased on most routes in 2021, following the pandemic. Those out of Asia saw the highest increases, between a 40 per cent increase for shipments to Africa and a 78 per cent increase for those to Europe.

The changes in contract freight rates also respond to changes in trade imbalances, which have increased according to UNCTAD trade analysis. Container ships thus have to return with more empty containers than prior to the pandemic. This change in the geography of trade is then also reflected in greater differences between freight rates in cases of growing trade imbalances. For example, before the pandemic, it cost 2.57 times more to ship a container from Asia to Africa than from Africa to Asia ($1,946/$758); in 2021, this coefficient increased to 4.12 ($2,733/$664). This is another example of the changing geography of trade having an impact on maritime freight rates and services.

Download: The geography of trade and supply chain reconfiguration – implications for trade, global value chains and maritime transport