Growing at sea

by Danilo Broggi

LONGITUDE N.118

Maritime logistics, new green ports infrastructure, services market, to see massive global growth by 2028 requires coherent policies. Italy is a key player in the Mediterranean area but it needs a business like merchant navy.?

In a?recent interview in the Italian daily?La Stampa,?Cesare d'Amico, head of?one of the most important Italian fleets of transport ships, declared:?"What is missing in Italy is a Ministry of Merchant Navy."

The warning is clear: following the pandemic and the halt to globalization, ship logistics have literally gone mad. The shortage of shipping containers has already damaged industries, also contributing to the inflationary push currently occurring in more mature markets (US first). On the other hand it induced a competitive vulnerability between those who had ships and containers and those who didn’t.?

The Merchant navy is made up of a?large?number of shipping companies who recruit their own Officer Cadets. Merchant seafarers, both officers and ratings, are civilians employed by these companies. Companies vary greatly in the size of ships, types of ships and areas of the world where they operate. Types of modern merchant ship include container ships, cruise liners, oil tankers, gas tankers, chemical carriers, bulk carriers, cable layers, Ro/Ro ferries, car carriers, oil-rig supply vessels and general purpose cargo ships. Their trade routes may take them to every continent and across every ocean on the globe.?

Looking at goods globally transported, 29.4% are "liquid bulk": gas, crude oil and petroleum derivatives (in 1995 this share was 44%), 53.5% “solid bulk” and the remaining 17.1% concerns transport on container ships (more than double compared to 1995).?

Line transport is mainly in two business areas: container transport and Ro-Ro transport (road vehicles and railway wagons). The share of container transport, in terms of tons, went from 8% in 1995 to 17% in 2017; in terms of value, this segment weighs much more because it is worth 60% of global maritime trade, which in 2017 was about $12 trillion according to the United Nation Conference on Trade and Development(UNCTAD) 2019 report. And it will grow by 2028. As a result, the shipping industry is continually changing and adapting to meet the needs of the commercial marketplace, so that it can become more competitive and cost-effective.?

In addition to ships, ports and their respective infrastructures also matter. The world leader in the handling of goods is the port of Ningbo-Zhousan in China, with a volume of over 1 billion tons. In the world top ten, only two are not Asian: Port Hedland in Australia and Dutch Rotterdam which works less than half of the volumes processed by Ningbo.?

In Italy, Alcide De Gasperi established the Ministry of Merchant Navy in 1946 bearing in mind the enormous importance of maritime transport in supporting the country's growth after World War II. Over time, it slipped down in the political wishlist to be merged with others (1993) and ultimately disappeared as a fragmented Department.?

Merchant shipping and port terminals are key elements of a country's competitiveness, capable of slowing down or accelerating development and economic recovery. 5G and digital port infrastructure (including cyber-security); new green technologies supporting ships (green engines, garbage recycling, data management, etc.) would enhance the economy of every country, as well explained among the six key points in the UNCTAD “Review of Maritime Transport 2020”:?“Digitalization efforts should enable enhanced efficiencies, including energy efficiency, and productivity in transport (for example, smart ports and shipping). It should also help countries tap e-commerce capabilities and transport facilitation benefits that boost trade. For more impact, cyber-security should be strengthened at all levels”.?These are just some of the trends that are making marine technology such an exciting and challenging field to be working in at present. The many tough technological problems the shipping industry is grappling with make marine technology a real land of opportunity for businesses of all sizes.?

Among other issues, piracy and a lack of well-trained crew are very relevant.?

In the Gulf of Guinea (West Africa), an important naval artery especially for energy, the number of sailors taken hostage off the coast increased by more than 50% in 2019. Crew members taken hostage while crossing the Gulf rose from 78 in 2018 to 121 in 2019, a figure that represents more than 90% of the sea seizures worldwide, according to the Annual Piracy Report by the International Maritime Bureau. It estimated the direct and indirect damage caused in 2018 and 2019 by piracy in waters also crossed by the Italian Navy since 2020, at between $2 and 3.5 billion.?

Responsible for over 90% of economic?trade in the world, shipping is embedded in our daily lives. Being a profession wherein the competency of personnel is gauged at an international level, the maritime industry rewards its seafarers rather well; primarily, this aspect has sparked a lot of interest among youth. For two million sailors and personnel on-board of transport vessels, skills certification such as to be recognized in all countries and training on new technologies are required. Not to mention much needed new personnel training.?

Italian policies assessing this relevant and complex industry are urgent, given??the regionalization of global trade. The Mediterranean is the crossroad of four conflicting areas – Asia, Africa, EU and NAFTA. On July 7 in Naples the annual report “Italian Maritime Economy” by the SRM of the Italian Bank Intesa Sanpaolo, highlighted the extraordinary opportunity for Italy to enhance European PNRR money for investments in Green Ports. It will boost the country’s competitiveness.?“The real challenge is to implement it quickly and well”?Massimo Deandreis, SRM general manager said.?

Logistics will be the key factor of global trade and of domestic development. Many other countries have understood it. It’s Italy’s last chance.?