A safe recovery but full of uncertainties
This combination of elements of uncertainty and elements of safe recovery at this stage characterises the forecasts of the major economic centers with reference both to the evolution of the economic systems as a whole, and to the specific sector of transport and logistics. Here are some significant examples.
International Monetary Fund (IMF). According to the latest report of the International Monetary Fund on economic growth (IMF, 2020), published on 13 October 2020, the world economy will record a contraction of -4.4% in global GDP at the end of 2020, slightly less severe than the -5.2% expected at last June. For 2021, on the other hand, a rebound in international activity is expected with + 5.2%, provided that the virus gives respite. Otherwise, the data will be much worse. Between now and 2025, it is estimated that the total loss of production in the world will amount to 28 trillion dollars: an unprecedented slowdown for the improvement of the average standard of living of the world population. In providing these data, the IMF highlights two important elements: first, projections assume that containment measures due to the pandemic will continue in 2021 and that transmission of the virus will end everywhere by the end of 2022; the second, however, that the economy remains subject to the risk of “setbacks”.
With regard to the situation of individual states, the IMF emphasises (2020) that each country faces different economic reactions which have a lot to do with the experiences made in pre-COVID situations. Hence the assessment that Europe, and especially the Eurozone, as happened in the previous economic crisis, this time too seems to be losing ground in the recovery phase with respect to the United States and China. In fact, according to the IMF, the gross domestic product of the euro area this year will fall by -8.3%, while in the United States the loss will stop at -4.3%, almost half. Among the advanced world economies, the only exception with the plus sign is China, which will even register + 1.9% at the end of the year. By the end of 2021, the US will have lost one point of GDP, the Eurozone almost three, while Beijing will have a rebound equal to +8.2 percent. According to IMF chief economist, Gita Gopinath, “This crisis is however far from over…The ascent out of this calamity is likely to be long, uneven, and highly uncertain” (2020).
EU Commission. The Annual Strategy for Sustainable Growth 2021, presented by the European Commission on 17 September 2020, opens the document with these forecasts: “Despite the strong, coordinated and innovative response, both at national and at EU level, there are many uncertainties that still remain, in particular, on the duration of the crisis and how exactly it will affect our lives and our economies” (European Commission, 2020b). According to the European Economic Forecasts of summer 2020, the economy of the euro area will contract by -8.7% in 2020 to then record a recovery of +6.1% in 2021, while the EU economy will contract by -8.3% in 2020 and then grow by +5.8% in 2021” (European Commission, 2020a).
Srm-Intesa Sanpaolo. Regarding the maritime transport sector, the estimates presented in the seventh Annual Report “Italian Maritime Economy 2020” by an authoritative Italian specialised study center “Srm-Intesa Sanpaolo”, show an overall decline of – 4.4% for 2020, followed by an increase of +5% for 2021 (Srm-Intesa Sanpaolo, 2020). The Report analysed the impacts of COVID-19 on the logistical-maritime system and the various aspects with which the phenomenon is manifesting itself: from the reduction of the passages in the Suez Canal to the new configuration of world traffic, up to the most recent trends in maritime flows of the international trading.
In detail of the container segment -“the closest proxy to international trade as it mostly expresses manufacturing traffic”- (Srm-Intesa Sanpaolo, 2020), the expected reduction in 2020 is equal to -7.3%, with a total of 742 million twenty-foot equivalent unit (TEU) handled in world ports, a figure that brings back the volumes of 2017. In other words, the virus has taken away the sector’s last four years of growth, although a rebound of +10% in 2021 and +6.6% in the 2022 is forseen. Then extending the forecasts to 2024, container handling in ports should grow at an average annual rate of +3.5% to reach 951 million TEU at the end of the four-year period. At the global area level, the recovery is evaluated in the following terms: Europe at + 2.3%, Africa at + 3.3%, Far East at + 3.9%, Middle East at + 4.5% and North America at + 2.3%.
The Italian Maritime Economy Report (2020) highlights, in particular, that the Mediterranean still represents a privileged transit route for container traffic, concentrating 27% of the approximately 500 global scheduled services by ship. Specifically, the Suez Canal in the first five months of 2020 no longer recorded the sustained (double-digit) growth of 2019: against a +7% increase in ships transit (oil sector ships + 11%, dry sector + 42%), containerships recorded a decrease amounting to -15%. The causes of this decline are mainly two, both attributable to the pandemic crisis: the decrease in the loads handled by ships and the reduction in the oil price which has led many container ships to pass through the African Cape of Good Hope to save toll costs: 52 megaships, equal to 5.1% of the total, preferred this last route in the period March-June 2020. This choice led the Suez Canal Authority to introduce a toll discount of 17% for the containerships heading south, and of 50 to 70% for the US East Cost-South Asia and South East Asia route. Other significant phenomena have emerged in relation to an increasing use of the Arctic route (Northern Sea Route – NSR) which in the period between January-April 2020 recorded an increase in passages equal to + 15% compared to 2019 (the most active carrier is the Chinese company COSCO) as well as the practice of “slow steaming”: again with a view to saving costs, the ships traveled the routes at a slower speed.
Also significant is the high number of “blank sailing” – routes canceled due to lack of cargo – which involved all the main routes (Srm-Intesa Sanpaolo, 2020). The phenomenon reached a value of 2.7 million TEU at the end of May 2020, equal to 11.6% of the total hold capacity. Srm-Intensa Sanpaolo (2020) estimates 7 million TEUs lost globally by 2020. The COVID-19 had a significant impact also on the great Chinese “Belt and Road Initiative” project: out of 2,951 projects worth 3.87 trillion dollars, 20 % is “seriously affected” (to consider that the import-export between the countries touched by the BRI represents 65% of the trade volume with the European Union). At the same time, there was a significant increase in rail transport on the China-Europe route and vice versa. In July, the number of freight trains reached a record of 1,232 trains, with a + 68% on July 2019. The Srm-Intensa Sanpaolo document (2020) reports that according to the Chinese railway authorities, “transport by train has had a decisive role in stabilizing the chain of international logistics interrupted by the pandemic”.