Connecting the South: Enhancing Logistics Connectivity to Support Trade in Developing Countries
Description
Maritime transport handles over 80% of global merchandise volume, making ports essential to global trade and economy. UNCTAD data on shipping capacity shows that developing economies actually hold the majority share of merchant vessels globally, with around 58,000 vessels (60.1%) compared to developed economies' 31,000 vessels (32.1%) and Least Developed Countries (LDCs) 6,000 vessels (6.4%). However, a World Bank ranking reveals that developed economies dominate the top spots in logistics performance (Logistics Performance Index 2023). Most developing economies and LDCs fall below the 20th rank. Despite having a larger fleet, developing economies struggle to leverage their shipping capacity due to inadequate logistics infrastructure (including essential facilities like cold storage for perishable goods) and its supporting capacity such as tracking ability, shipment price competitiveness, and timeliness.
Technology has played a significant role in this progress, with the implementation of tracking systems and digital platforms helping to increase transparency and efficiency in logistics operations. Focused on reducing shipment prices and improving timeliness making goods more competitive in the global market. Trade also has direct consequences on climate change and the other way around since the environment has a significant role in forming trade patterns. According to OECD data, around 80% of global trade from maritime shipping could experience negative externalities, for example due to extreme weather and rising sea levels.
Optimizing development of robust and sustainable logistics infrastructure in developing countries will enable full utilization of existing shipping facilities, improve trade connectivity with other countries, and participate more effectively in the global economy.
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