In Asia, global trade trends are shifting the directions that money is flowing in the maritime industry as diplomatic tensions overflow into hostile waters and geopolitics create choppy waves. Some of those who bear the most brunt are seafarers. 

In an interview with Maritime Fairtrade, Weimin Ren, director, Transport Division, UN Economic and Social Commission for Asia and the Pacific (ESCAP), talks about how the complexities conflate and reconfigure the maritime climate.

ESCAP is an inclusive intergovernmental platform in the Asia-Pacific region promoting cooperation among 53 member states and nine associate members in pursuit of solutions to sustainable development challenges. ESCAP is one of the five regional commissions of the United Nations.

Weimin Ren, director, Transport Division, UN ESCAP. Photo credit: UN ESCAP

In Asia’s maritime industry, which areas have seen an increase and dip in investments in the past two years and what are the reasons?

In the APAC maritime industry, investment trends over the past two years have been influenced by shifts in global trade patterns – the COVID-19 pandemic’s aftermath, advancements in technology and many other factors. 

Sectors that have seen increased investment include automated terminal operations and smart port technologies. Countries such as China and Singapore are leading the way with significant investments to improve container handling efficiency. 

Investments in green port initiatives such as shore power systems for sustainable ports and eco-friendly logistics solutions have also increased, particularly in countries with a focus on climate change and reducing carbon footprints. 

With the recovery of maritime traffic since the pandemic, the Red Sea crisis and Suez Canal restrictions, orders for new ships have increased, mainly for container ships and bulk carriers, while some shipping companies are investing in building alternative fuel-powered ships to comply with environmental regulations or retrofitting existing ships to meet new environmental standards and improve fuel efficiency. 

Investments in digital technologies, including blockchain for supply chain transparency, the Internet of Things (IoT) for vessel monitoring, and AI for predictive maintenance, have surged, while widespread adoption of digital port management systems to optimize logistics and cargo handling has become a key area of investment.

Budget constraints and modernization of existing facilities may have slowed investment in existing port expansions and new construction projects. In some areas, particularly those with declining traffic, investment has declined due to underutilization. Investment in second hand and less efficient vessels has also declined as companies focus on more sustainable and technologically-advanced options, while speculative investments in large vessels appear to have been cautious as global trade remains uncertain due to geopolitical tensions. 

While certain sectors have experienced increased investments due to innovation and the need for sustainability, others such as shipbreaking and traditional shipping services have seen decreases in investment largely tied to market dynamics and regulatory pressures. The trend towards greener practices and enhanced security measures is reshaping the investment landscape in the shipping industry across the region. 

ESCAP is helping countries monitor and respond to these trends through regular analytical reports, capacity building on digitalization and decarbonization of shipping, and an annual regional dialogue on sustainable maritime connectivity.

How did the trends affect commercial performance and financial stability of the maritime industry? 

Following the initial disruption caused by the pandemic in 2020, the shipping industry saw a surge in freight rates throughout 2021, driven by strong demand for commodities, supply chain disruptions, and port congestion. Freight rates remained elevated in early 2022 but began to stabilize and even declined later that year. In early 2024, as global trade volumes adjusted, the increased capacity from new vessel deliveries and a global economic slowdown exacerbated the situation. 

Geopolitical conflicts have also contributed to the volatility of shipping markets, affecting energy supplies and commodities, which have impacted freight rates for bulk carriers and tankers, leading to changes in shipping routes, increased insurance premiums, and increased shipping costs – affecting the overall efficiency of the supply chain. 

Drought-related restrictions on navigation through the Suez Canal have led to significant delays and detours in shipping routes, further increasing costs and impacting schedules, a symbolic example of how climate change is impacting maritime transport.

From a financial perspective, many container shipping companies have seen record profits at the peak of the rate hike. However, these profits have begun to normalize in the face of falling rates and rising operating costs. 

Bulk carriers and tanker operators have had mixed results. Some have benefited from increased demand for energy transport due to geopolitical conditions, while others have struggled with volatile demand and rising operating costs. 

The sharp rise in oil prices due to geopolitical tensions has had a significant impact on operating costs, squeezing shipping companies’ margins, meaning that even with higher rates, profitability has been reduced by higher fuel costs. 

Ongoing challenges due to supply chain disruptions, port congestion, labor shortages, and increased regulatory oversight have increased operational complexity and associated costs.

Many shipping companies which leveraged strong freight rates to invest in fleet expansion or modernization faced a financial balancing choice, with some taking on considerable debt, while others choosing to prioritize cash reserves to enhance financial stability amidst uncertainties. 

Increasingly, shipping companies are investing in green technologies and compliance with stricter environmental regulations, which, while essential for long-term sustainability, requires upfront capital and may strain short-term finances. 

Companies are navigating this complex and variable commercial landscape with a focus on maintaining financial stability while preparing for future demands and regulatory requirements. The impact of these factors is likely to continue shaping the industry’s performance in the coming years. 

Asia sees the most piracy and armed robbery incidents. What are your thoughts? 

Worldwide, 132, 115, and 120 piracy incidents occurred in the past three years, respectively. According to the International Maritime Bureau (IMB) and other maritime security organizations such as the Regional Cooperation Agreement on Combating Piracy and Armed Robbery against Ships in Asia (ReCAAP), a significant proportion of reported incidents of piracy and armed robbery in Southeast Asia occur in the Strait of Malacca, one of the most important choke points for global trade. 

Incidents reported over the past few years indicate that piracy is opportunistic in nature, with pirates often targeting small vessels and cargo ships while in port or at anchor.

The reasons for the continued existence of such acts of piracy are complex and intertwined, but the most fundamental is economic instability which needs to be addressed in the broader context of sustainable development at country, subregional and regional levels. 

The practical response strategy to counter piracy and armed robbery in the region involves collaboration among various stakeholders, including governments, maritime agencies, the shipping industry, and international organizations. The strategies typically include proactive measures, reactive responses, and ongoing cooperation. 

ReCAAP has the potential to play a leading role in this strategy by facilitating cooperation, enhancing information sharing, leading capacity-building initiatives, and engaging with global entities. 

How does economic uncertainty affect seafarers?

The region plays a crucial role in the global supply of seafarers, accounting for a significant share of the total workforce in the maritime industry. According to the Seafarer Workforce Report (2021) by BIMCO and the International Chamber of Shipping, the region supplies about 50 to 60 percent of the world’s seafarers, with countries such as the Philippines, China, India, and Indonesia being major contributors. 

The maritime sector is a significant source of employment in these countries, providing livelihoods for millions and supporting local economies. Seafarers’ remittances contribute significantly to national economies, particularly in countries such as the Philippines. 

The seafarer market is facing challenges such as prolonged isolation from society, especially intensified by the COVID-19 pandemic, various environmental regulations and training needs, an increasing number of older seafarers, and gender imbalances. 

The Seafarers’ Manpower Report warns that there will be a shortage of officers by 2026 and highlights the importance of the industry in actively promoting maritime careers and strengthening maritime education and training globally to enable greener and more digitally connected ship operations. 

This observation reflects a broader trend across other transport sub-sectors such as road-based public transportation, which suffers from a shortage of skilled labor due to challenging recruitment markets and unattractive career paths. 

Selected ESCAP member states have shared experiences where skilled labor shortage is starting to impact availability and reliability of service operations. Securing a qualified crew is key to maintaining the sustainability of the shipping industry, so ensuring that the supply of Standards of Training, Certification and Watchkeeping for Seafarers (STCW)-certified crew continues to meet demand requires collaboration and partnerships between key stakeholders, including shipping lines, seafarer training institutions, regulators and unions.

Many countries in the Asia-Pacific region have established robust maritime education programs and have training programs that reflect international conventions such as STCW, ensuring that seafarers are well-trained and prepared to meet industry standards. 

I also note the efforts of shipping companies in securing well-educated and trained seafarers for their growing fleets, especially those using new alternative fuels and sophisticated digital equipment. I expect that policies will continue to provide higher wages and benefits to secure qualified seafarers. 

What more can be done for gender equality in the maritime industry? 

Gender equality in the shipping industry has been a major focus in recent years, but there is still a long way to go. Despite a 45.8 percent increase in female seafarers since 2015, the 2021 report states that women seafarers make up only about 1.2 percent of the global seafarer workforce. Organizations such as the International Maritime Organization (IMO) and the Women’s International Shipping and Trade Association (WISTA) are actively working to promote gender diversity. 

The establishment of Women’s Maritime Associations (WIMA) in various regions by IMO and WISTA is an important step towards improving gender equality. These networks will provide support and career development opportunities for women in the shipping sector. 

In this regard, some policy recommendations from ESCAP’s report on “Gender and maritime transport in Asia and the Pacific” can provide a starting point for improving gender equality in the shipping industry.

The observations shared in this report are representative of a broader need to promote gender diversity in the transport workforce. Women represent only eight percent of the transport workforce in Asia and the Pacific and are more likely to be in administrative or customer-facing occupations, which are less remunerated than operational, technical or managerial positions These roles are typically done by men. 

The barriers to women’s participation in transport work include gender norms and discrimination, limited access to financial and digital resources, lack of gender-responsive labor and social policies, health and safety concerns and gender-based violence and sexual harassment.

However, I would like to emphasize that each of these needs to be followed by additional investment and policies from governments, shipping companies, and education and training institutions. This is because in most countries, women have limited access to career development programs in the shipping sector and are prone to career interruptions due to pregnancy and childcare, so it is important to strengthen the capacity of educational institutions and the private sector, especially shipping companies, to promote women’s participation in the shipping sector. 

While progress is being made in key areas, achieving true gender equality in the shipping sector requires sustained commitment and action from all stakeholders. In this context, I am pleased to confirm that gender dimension has been incorporated in all ESCAP programs and activities in the maritime and port sector.

Photo credit: iStock/ thitivong