New York: International seaborne trade, which surged to record levels last year, is the latest victim of the ongoing financial crisis, impacting adversely countries that depend on commodities trade, a United Nations report says.
The UN Review of Maritime Transport said seaborne trade surpassed eight billion tonnes last year and reached a peak at the start of this year.
But the report, issued by the UN Conference on Trade and Development, highlights that the Baltic Dry Index (BDI) - an indicator that predicts future economic activity by measuring global supply and demand for the commodities shipped aboard dry bulk carriers - declined by over 90% between May 2008 and this month.
Such a decline indicates that the unfolding financial crisis has gripped international trade, with negative implications particularly for developing countries trading in commodities.
While a drop in freight rates would be an immediate effect of a falling BDI, which would be beneficial for exporters or importers of food and commodities, a declining index is also accompanied by reduced demand for shipping services, heightening the effects of the financial crisis and global demand for goods.
The report reveals that this year, the total world merchant fleet had expanded by 7.2% to reach 1.12 billion deadweight tonnes. Likewise, the order books for new vessels in 2008 were at their highest level ever, with over 10,000 ships, marking a 28% increase on the current merchant fleet.
As of mid-2008, however, evidence of cancellations for new ships emerged, a move which could have a major impact on the ship-building industries of countries such as China, South Korea and Vietnam.